US July layoffs soar to highest since 2020 as AI and budget cuts hit jobs
Outplacement firm Challenger, Gray & Christmas reported 62,075 job cuts last month, up 29 percent from June and 140 percent higher than the 25,885 recorded in July 2024.
The figure is well above the post-pandemic average for the month of 23,584 between 2021 and 2024, and slightly higher than the past decade's July average of 60,398. It brings total layoffs this year to 806,383, a 75 percent rise on the same period in 2024 and already 6 percent higher than the full-year total for last year.
It is the highest January-to-July figure since 2020, when pandemic shutdowns pushed layoffs above 1.8 million.
The increase is driven by government downsizing, corporate restructuring and the growing impact of artificial intelligence. Public agencies, tech companies 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, senior vice president at the firm.
Federal government job losses total 292,294 so far this year, as President Donald Trump's Department of Government Efficiency continues to reduce the size of multiple agencies. The cuts have also hit contractors and organisations reliant on public funding, described in the report as the "DOGE Downstream Impact".
Why are tech and retail cutting the most jobs in 2025?
In the private sector, technology and telecom companies are cutting staff as they focus investment on AI and cloud services. Retailers are reducing headcount due to weaker consumer spending, higher costs and shifting buying habits. Finance, business services and transport have also seen above-average cuts, with firms scaling back capacity after pandemic-era growth.
Inflation, changes in demand and global uncertainty have been cited in more than 170,000 job losses this year. Restructuring, closures and bankruptcies have also been key factors.
Fabian Stephany, assistant professor for AI and work at the University of Oxford, said the current trend reflected "late-cycle cost discipline and post-pandemic normalization" rather than a full-scale jobs crisis. "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.
AI have been linked to over 20,000 layoffs
Automation and AI have been linked to over 20,000 layoffs this year, including 10,000 directly attributed to AI. Stephany said the technology's effects were most visible in 'transactional, routine, and standardised work—particularly in junior roles.'
Also Read: Indian-American coder's only job offer comes from Chipotle as AI reshapes tech hiring
Jason Leverant, COO and president of AtWork Group, said automation mainly affects jobs that are "dull, dirty or dangerous". He noted that many white-collar roles in the "dull" category are already being replaced by AI tools. Both Leverant and Stephany expect AI to keep reshaping the job market, but see changes happening gradually through attrition and slower hiring rather than sudden mass layoffs.
Unemployment remains in the low 4 percent range, suggesting many people are finding new roles. But Leverant warned some, especially in middle-management and specialist jobs, may face longer periods out of work. If cuts continue at the current rate, unemployment could rise later this year. He added that while the focus of layoffs in the public sector gave him some confidence in 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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