US employers have slashed over 1 million jobs so far this year

The labor market is feeling the sting of AI investment and corporate belt-tightening.

US-based employers have laid off nearly 1.1 million people through October, a 44% increase over all of 2024, and the highest level of job cuts for the period since 2020, the first year of the Covid-19 pandemic, when employers cut 2.3 million jobs by October, according to a report released Thursday by outplacement and executive coaching firm Challenger, Gray & Christmas.

There’s no shortage of ways to describe how dire these October and year-to-date jobs cuts were. They came both from massive layoffs at individual firms (see: Amazon) as well as an uptick in total companies cutting jobs. October’s roughly 153,000 job cuts were the most layoffs for the month since 2003. They were also “the highest total for a single month in the fourth quarter since 2008,” according to Andy Challenger, chief revenue officer of Challenger, Gray & Christmas. “Like in 2003, a disruptive technology is changing the landscape,” he said in a statement.

“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,” Challenger said. “Those laid off now are finding it harder to quickly secure new roles, which could further loosen the labor market.”

Weak consumer spending is playing out in quarterly earnings. McDonald’s CEO Chris Kempczinski said in a Nov. 5 earnings call that the restaurant franchise is seeing “a bifurcated consumer base,” with foot traffic in its restaurants from low-income customers “declining nearly double digits in the third quarter, a trend that’s persisted for nearly two years,” CNBC reported. Stanley Black & Decker recently cut its full-year outlook as it contends with both “tariffs and weak consumer spending” on DIY projects, according to the Wall Street Journal.

The AI jobs takeover also appears to have commenced. Goldman Sachs predicted in August that AI could replace 6% to 7% of the US workforce if it’s “widely adopted.” Gad Levanon, chief economist at research firm Burning Glass Institute, told CNBC that “we are at the beginning of a multi-decade progress development that will have a major impact on the labor market.”

The day before Challenger released its report, ADP came out with its monthly employment data, which showed that the private sector added 42,000 jobs in October, with pay up 4.5% YoY. The job gains came after “two months of weak hiring,” according to a news release.

Private party data sources are all CFOs have access to right now, due to a dearth of new federal economic data amid the long-running government shutdown. The only new federal data in October was the Consumer Price Index, which showed that prices rose 0.3% in September.