US layoffs hit highest level since 2020, fueled by AI and cost cuts

A relentless wave of corporate layoffs intensified dramatically in the final quarter of 2025, pushing the total number of job cuts announced by U.S. employers this year to nearly 1.1 million. This is the highest level recorded since the pandemic-driven shutdowns of 2020.

Data from October shows employers announced over 153,000 job cuts, marking the highest total for that month in 22 years. Among the latest companies to let people go are giants Amazon, UPS, and Target, which collectively eliminated more than 60,000 jobs in 2025.

This trend highlights a fundamental shift in the labor market, characterized by companies prioritizing extreme efficiency and the rapid adoption of Artificial Intelligence (AI).

The dual drivers: AI and economic correction

Analysts point to two primary forces driving this massive workforce contraction:

• AI adoption (The new efficiency): AI is no longer a futuristic threat; it is an active driver of job displacement. Over 17,000 roles have been lost directly to automation, with companies like IBM and Meta cutting thousands of jobs that either became redundant or were taken over by AI agents. This is hitting corporate and white-collar roles particularly hard, including those in software and middle management.

• Post-Pandemic Correction: Many large tech, retail, and finance companies are right-sizing their teams after the frenzied overhiring that occurred during the 2020-2022 digital boom.
  

Which Industries Are Bleeding the Most?

The job cuts are not evenly distributed, with certain sectors bearing the brunt of the "jobless boom"—a phenomenon where corporate profits and stock market valuations soar even as employment shrinks.

The tech sector continues to lead in total cuts, with some notable companies including Amazon, Microsoft, IBM, Intel, and Meta. Retail is also cutting after facing increased pressure from slower consumer spending and a shift to online logistics. The companies in the sector, including Target and Kohl cut over 88,000 jobs through October.

Finance has also been affected, with banks and investment firms consolidating operations and automating back-office functions. The government also had surprisingly high cuts, largely due to federal funding reductions and budgetary pressures.

Warning signs for the broader economy

​While the overall national unemployment rate remains relatively low (around 4.3%), experts warn that the sheer scale of the cuts, especially in high-paying sectors, signals a potential cooling of the economy.

Companies are sharply scaling back their hiring plans, now projecting significantly fewer hires for the rest of the year compared to 2024. Moreover, laid-off workers are reportedly finding it much harder to quickly secure new roles, suggesting the labor market is becoming less tight.

​This situation has led many economists to caution that the sustained wave of corporate downsizing could eventually dampen consumer confidence and spending, which are essential pillars of U.S. economic growth.