U.S. employers announced most October layoffs in 22 years: Report

Artificial intelligence drove U.S. employers to announce 153,074 layoffs last month, the worst October since 2003 and the worst year overall since 2009, the executive outplacement firm Challenger, Gray & Christmas reported Thursday.

The Chicago company said AI-related cuts to white-collar technology jobs led the way in a 175% surge from 55,597 layoffs in October 2024 and a 183% jump from 54,064 in September.

“Some industries are correcting after the hiring boom of the pandemic, but this comes as AI adoption, softening consumer and corporate spending, and rising costs drive belt-tightening and hiring freezes,” said Andy Challenger, the company’s workplace expert and chief revenue officer. “Those laid off now are finding it harder to quickly secure new roles, which could further loosen the labor market.”

Mr. Challenger cited the “disruptive technology” of AI as the main factor driving the layoffs in October. The spike of 2003 came when the widespread adoption of cellphones in the telecommunications and retail industries led to 171,874 layoffs.

The findings come as the federal government shutdown has suspended job market data gathering and reporting since September.

They also come after two straight months of Federal Reserve interest rate cuts, responding to a softening white-collar job market.

Companies such as Amazon, Microsoft and Intel have laid off tens of thousands of employees this year as they adopt AI for some operations.

The Challenger report found that the technology sector purged 33,281 jobs in October, up nearly sixfold from 5,639 in September.

During the first 10 months of the year, technology companies cut 141,159 jobs, up 17% from 120,470 during the same stretch in 2024.

The biggest downsizing occurred in warehousing jobs, with 47,878 layoffs last month, up from 984 in September.

The next-highest industries were 3,409 job cuts in the consumer products sector, 2,431 in retail, and 1,990 in the service industry. All of these sectors have cut significantly more jobs this year than in 2024.

The report found that employers cited cost-cutting in 50,437 of their announced layoffs last month, making it their top reason for cuts.

Employers also cited AI for 31,039 job cuts in October. That number accounted for the bulk of the 48,414 AI-caused layoffs in the entire year.

Market and economic conditions accounted for 21,104 cuts last month. Closures of stores, units, and plants accounted for 16,739 layoffs, and 7,588 announcements cited “restructuring” needs.

For the year to date, the Challenger report noted that Trump administration cuts to the federal workforce and grants have driven most layoff announcements. The company expects a 16-year low for seasonal hiring during the winter holidays.

The Trump administration has repeatedly pledged that supply-side investments in manufacturing jobs will offset the impacts of its efforts to shrink the federal government.

In a statement to The Washington Times, a White House official pointed to a Wednesday report from payroll processing company ADP that October saw net job growth of 42,000, reversing two straight months of private-sector job losses.

“The ADP report released yesterday shows job gains in October doubled the market’s expectations, and a recent ZipRecruiter survey shows that employers expect to expand their workforce next year — good news for businesses, markets and families amidst the Democrat shutdown,” said Taylor Rogers, a White House spokeswoman.

“President Trump has already created nearly half a million jobs in the private sector for American-born workers, and Americans will continue to see job growth as the trillions in investments President Trump has secured materialize,” she added, responding to the Challenger report.

DOGE downsizing

According to the Challenger report, Mr. Trump’s Department of Government Efficiency has been the main driver of layoffs this year, including downsizing the federal workforce and its private contractors.

The company found that layoff announcements peaked in March, when DOGE cuts to federal grants and workforces led to 350 job cut plans.

Overall, 293,753 of the 1.1 million job cuts announced this year have cited “DOGE impact,” making it the top reason for downsizing.

Challenger attributed an additional 20,976 cuts to “DOGE downstream impact,” reflecting “the loss of federal funding to private and nonprofit entities.”

By contrast, U.S. employers announced 488,077 planned hires during the first 10 months of this year, down 35% from 750,333 in 2024 and the lowest year-to-date total since companies planned 459,971 new hires in 2011.

So far this year, employers have announced 48,808 new hires per month, the lowest monthly average since Challenger counted 44,798 new hires per month in 2011.

That includes 372,520 seasonal hiring plans announced through October, the lowest number for the period since Challenger began tracking them in 2012.

“It’s possible with rate cuts and a strong showing in November, companies may make a late-season push for employees, but at this point, we do not expect a strong seasonal hiring environment in 2025,” Mr. Challenger added in a statement.

While the Challenger report did not include 2026 projections, recent reports have predicted a hiring rebound.

The American Staffing Association has tracked six straight weeks of increased hiring activity, driven by expectations of lower labor costs due to tax code changes and two straight months of interest rate cuts.

The recruiting industry trade group has also tracked a recent uptick in temporary and contract hiring, which usually precedes a broader surge in labor market activity.

According to several staffing and hiring industry experts reached for comment, the job market is headed for a major transition in 2026.

“We’ve seen this pattern before during tech-related market shifts: a short-term correction before a major realignment,” said Lacey Kaelani, CEO of Metaintro, a New York City-based job search engine. “Companies are cutting roles faster than new opportunities are being created because there isn’t a training pathway for these new emerging jobs.”

Hiring rebound

ZipRecruiter recently reported that 63% of the over 1,500 hiring bosses it surveyed in September expected to expand their payrolls in 2026, with small businesses and entry-level openings leading the way.

That’s down from 76% of those surveyed in 2024 who expected to expand their workforces this year. But it’s a rosier picture than the company’s first annual employer survey in 2023, when 57% of hiring bosses couldn’t find qualified applicants.

Hiring industry experts say the health care industry and skilled trades are likely to expand their payrolls quickly in the coming year as interest rate cuts reduce construction loan expenses. That means more openings for plumbers, electricians and machine technicians.

“With the continued impact of technology, AI and automation, I believe we’re going to see stronger hiring in industries that aren’t impacted by these advances in technology,” said Jason Leverant, president of AtWork, a national staffing franchise.

Fraser Patterson, the founder and CEO of Skillit, an AI-driven hiring platform focusing on the construction industry, said large and national contractors are eager to hire as they face a shortage of skilled workers and a backlog of jobs.

“These companies are expanding rapidly on the back of record investment in energy, infrastructure and AI-related construction, and their hiring plans for 2026 reflect that momentum,” Mr. Patterson said.

Other industries likely to expand in 2026 include IT, energy, data center and semiconductor companies.

“I think the health care, manufacturing and industries that are powering AI will continue to hire more in the coming year,” said Scott Siff, a longtime corporate consultant who plans to launch a job-matching platform for older workers next month.

ZipRecruiter noted that employee turnover has dropped from 177% in 2023 to just 50% this year, reflecting a historic hiring freeze as businesses and workers strove to avoid “unnecessary risk.”

That trend has reduced the number of open positions, further deflating hiring activity.

The Challenger report published Thursday noted that the 1.1 million job cuts announced through October are up 65% from 664,839 during the same period last year and up 44% from 761,358 for all of last year. It’s also the highest layoff tally since the first 10 months of 2020, when pandemic restrictions prompted 2,304,755 announced cuts.

Federal funding cuts have also driven nonprofits to announce 27,651 layoffs this year, up by 419% from 5,329 during the first 10 months of 2024.

There have also been 16,580 media layoffs this year, up 26% from 13,279 last year.

According to workforce experts, applicants who pivot quickly toward jobs supporting AI will have the best chance of finding work in the coming year.

“Hiring for corporate, white-collar jobs has become the most stagnant as companies prepare for a dramatic shift in models and technology,” said Javier Palomarez, CEO of the United States Hispanic Business Council.