With the labor market cooling, experts have said that now is the best time for employers to invest in their existing employees. The only problem is that companies aren’t actually doing that.

That’s according to recent research from Workday. Despite a modest increase in hiring demand in the first half of this year, internal hiring and promotion rates have actually fallen.

Hiring demand was up 6% year-over-year in the first half of 2025, down slightly from the 7% YoY increase in the first half of 2024, according to Workday’s internal data and external surveys.

However, internal hiring fell 8% YoY, and only 30% of all hires in June were internal. Additionally, promotion rates fell in 10 of the 11 industries tracked by Workday; manufacturing was the only one to see an increase in promotions.

“It is pretty rare for 10 industries to see a promotion recession all at the same time,” said Phil Willburn, VP of people analytics, insights, and experiences at Workday. “That was very surprising to me in our latest data.”

It’s creating some frustrations. More than 57% of job seekers feel stuck in today’s labor market, according to one of the surveys conducted by Workday for the report. (High performers, who are often more likely to land opportunities even in cooling markets, aren’t feeling so stuck, though: Attrition for high-performing employees was up in every single industry, with the largest spikes being in retail and healthcare, up 64% and 28% YoY.)

AI transformation may be to blame, Willburn said. Many companies have been eager to adopt the new technology, but haven’t necessarily focused on training their workers to use it. (Just 21% of business leaders surveyed by Workday believe investing in AI tools and upskilling will be a key retention driver in the next year.) Instead, they’re focused on getting these skills from external hires, which may push high-potential employees out the door.

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