US Hits Highest Layoffs Since COVID
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U.S. layoffs surged in July to their highest level since the early months of the COVID-19 pandemic.
In July, there were 62,075 job cuts announced, according to a report by outplacement firm Challenger, Gray & Christmas. That's a 29 percent jump from June and 140 percent higher than the 25,885 announced in July 2024.
The July figure is well above the post-pandemic average for the month (23,584 between 2021 and 2024) and slightly higher than the past decade's July average of 60,398. It pushes the 2025 total to 806,383 layoffs—a 75 percent increase compared with the same period last year and already 6 percent higher than all of 2024. It's the highest January-to-July figure since 2020, when pandemic shutdowns drove layoffs above 1.8 million.
The surge in layoffs in 2025 is due to a mix of government downsizing, corporate restructuring and the growing effects of artificial intelligence. Public agencies, tech firms and retailers are leading the cuts.
"We are seeing the federal budget cuts implemented by DOGE impact nonprofits and health care in addition to the government. AI was cited for over 10,000 cuts last month, and tariff concerns have impacted nearly 6,000 jobs this year," said Andrew Challenger, a senior vice president and labor expert at Challenger, Gray & Christmas.
Stock image/file photo: a laid off worker with a box of his things.
Stock image/file photo: a laid off worker with a box of his things.
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Where Are the Layoffs Happening?
The majority of layoffs this year have been from the federal government—a total of 292,294 since the year started—as President Donald Trump's Department of Government Efficiency (DOGE) continues its mission to scale down the size of numerous agencies. There have also been knock-on effects for contractors and organizations reliant on public funding, which the report calls the "DOGE Downstream Impact."
Private sector cuts have been concentrated in industries under structural pressure. Technology and telecom firms are reducing head count as they shift investment toward AI and cloud infrastructure. Retailers have been hit by softer discretionary spending, higher costs and changing consumer habits, prompting store closures. Other sectors above historical layoff norms include finance, business services and transportation, where companies are scaling back capacity after pandemic-era expansions.
Reasons Behind the Cuts
Economic conditions—including inflation, shifting demand and global uncertainty—have been cited in more than 170,000 job cuts so far this year. Business restructuring, store or plant closures, and bankruptcies have also played a major role.
Fabian Stephany, an assistant professor for AI and work at the University of Oxford, told Newsweek the current wave of layoffs was best understood as a combination of "late-cycle cost discipline and post-pandemic normalization," rather than a sign of a full-scale employment downturn.
"Many firms are correcting for the overhiring of 2021 to 2022 while protecting margins through productivity gains, some of which are enabled by automation," he said.
Technological change is another driver. Automation and AI have been linked to more than 20,000 layoffs in 2025, with another 10,000 explicitly attributed to AI.
Stephany said AI's immediate effects were most visible in "transactional, routine, and standardized work—particularly in junior roles."
Jason Leverant, the COO and president of AtWork Group, told Newsweek that automation tended to hit jobs that fell into what he called the "Three D's": dull, dirty or dangerous. Many white-collar positions in the "dull" category are already being replaced by AI tools.
Both Leverant and Stephany said AI would keep reshaping the labor market this year. "The likely path is steady, incremental reshaping of roles through attrition and slower hiring, rather than sharp spikes in AI-related layoffs," Stephany said.
Labor Market Outlook
Despite the scale of layoffs, unemployment remains in the low 4 percent range, suggesting that many displaced workers are having luck finding new roles.
But Leverant said that not all workers were likely to transition quickly. "I expect to see extended periods of unemployment for people in middle-management and highly specialized roles where openings are much more limited," he said.
If cuts continue at the current pace, unemployment could edge higher later this year. Leverant said that while the concentration of layoffs in the government sector gave him some confidence in the health of private sector hiring, "if job cuts continue and the unemployment rate rises, it will only spark further concern, uncertainty, and potential volatility in the markets, creating a vicious cycle that we need to break."
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