Dive Brief:
- Technology-related factors such as automation drove 20,000 job cuts among U.S.-based employers in the first half of the year, outplacement firm Challenger, Gray & Christmas said in a recent report.
- Only 75 of those cuts were explicitly attributed to artificial intelligence, although many companies may be categorizing their AI-related layoffs more broadly, according to the analysis. Challenger’s research department uses information such as public statements and government filings to track layoff trends.
- “We do see companies using the term ‘technological update’ more often than we have over the past decade, so our suspicion is that some of the AI job cuts that are likely happening are falling into that category,” Andy Challenger, a senior vice president at the Chicago, Illinois-based outplacement firm, told CFO Dive. In some cases, companies may avoid directly tying their layoffs to AI because they “don’t want press on it,” he said.
Dive Insight:
Procter & Gamble, Microsoft, Citigroup, Walmart, CrowdStrike and Disney are among corporations across a variety of sectors that have announced layoffs in recent months, according to a CNBC article.
The trend is showing no signs of slowing down as the second half of the year begins, with Microsoft announcing last week that it will lay off about 9,000 employees across different teams in its global workforce.
Many organizations are under rising pressure to trim costs amid global economic uncertainty triggered by President Donald Trump’s trade policies, the CNBC report said. Layoffs have been lumped in with larger cost-cutting strategies or growth plans in some cases.
Four in 10 employers anticipate reducing their workforce where AI can automate tasks, according to World Economic Forum survey findings unveiled in January.
Fintech company Klarna has slowed AI-driven job cuts after concluding the effort has gone too far, underscoring the risks that financial services firms face when replacing humans with a still largely untested technology, according to a May Bloomberg article.
U.S.-based employers announced a total of 744,308 job cuts in the first six months of the year, according to Challenger. That’s the highest level recorded year-to-date since 2020 when 1,585,047 were announced, the firm said.
The Department of Government Efficiency has been the leading cause of job cut announcements so far this year, with the number reaching 286,679, Challenger said. This includes direct reductions to the federal workforce and its contractors. An additional 11,751 cuts have been attributed to DOGE “downstream impacts,” such as the loss of funding to private non-profits and affiliated organizations.
Market and economic conditions are the second-most cited reason for workforce reductions, responsible for 154,126 cuts year to date, according to Challenger’s research. Closings of stores, units, or plants led to 107,142 layoffs so far this year, while restructuring efforts have resulted in 64,487 job cuts, the report said.
Other drivers of layoffs so far this year include bankruptcies (35,641), cost-cutting efforts (17,245), contract losses (8,893), and financial declines (4,909), according to the study. A total of 18,781 cuts were announced without a specified reason.
