Increasing Layoffs Linked to AI Adoption in the U.S.
Recent data shows that U.S. employers ramped up layoffs in May, with the primary reason being the deployment of artificial intelligence (AI).
A report from Challenger, Gray & Christmas, an executive coaching and outplacement firm, indicated that a total of 97,006 job cuts were announced in May. This marked a 16% increase from April’s 83,387 layoffs and a 3% rise from the same month last year when 93,816 layoffs occurred.
For a third consecutive month, AI emerged as the leading cause for layoffs. Specifically, 38,579 jobs were cut due to AI, representing the highest monthly total for this issue since tracking began in 2023, making up about 40% of all layoffs in May.
According to Andy Challenger, a workplace expert at the firm, “Technology is reshaping the labor market in real-time. AI is now cited as the main reason for job cuts.” He added that the implications of AI on the workforce are significant but the timeline of these changes remains uncertain.
Job Growth Surprises Economists
Interestingly, despite the increase in layoffs, the U.S. economy added 172,000 jobs in May, exceeding expectations.
In the tech sector alone, 38,242 job cuts were reported in May—the highest since August 2024. This year’s tech layoffs reach 123,653, which is a staggering 66% increase compared to last year.
Challenger noted, “Even though concerns about job loss due to AI exist, this technology hasn’t yet led to the widespread job destruction many predicted.” He likened AI’s influence on productivity to how spreadsheets and email eventually enhanced work processes.
There’s a lingering question about how quickly AI will transform the workforce.
Worker Anxiety and Automation
As companies increasingly invest in AI, there’s growing unease among workers about job security. In May, the transportation sector reported the second-highest layoffs, counting 6,909 job cuts, while service companies let go of 6,268 workers.
Product manufacturers have also announced 30,414 job cuts this year, a 17% increase compared to last year. This trend raises questions about how inflation and economic conditions are influencing workforce decisions.
Bankruptcies Contribute to Layoffs
Additionally, temporary layoffs due to bankruptcy amounted to 5,637 in May, representing the highest since February 2025.
This year alone has seen 69,645 job cuts announced, with mergers and acquisitions accounting for more than six times the layoffs compared to the same period last year.
Challenger explained, “Alongside the ongoing dialogue around AI, there’s also a noticeable spike in layoffs driven by restructuring as companies pivot towards an AI-centered economy.”
