US Layoffs Surge in July 2025: A Closer Look at the Causes
The United States is currently experiencing its steepest wave of layoffs since the early chaos of the COVID-19 pandemic. In July, job cuts surged by 140% compared to a year ago, creating significant turmoil across various industries.
Understanding the Scale of Layoffs
Employers reported a total of 62,075 layoffs last month, marking a 29% increase from June. This figure far exceeds the post-pandemic average for July, which stood at 23,584 between 2021 and 2024. Moreover, it surpasses the monthly average of 60,398 layoffs recorded over the past decade, according to a report from outplacement firm Challenger, Gray & Christmas.
A Shocking Year-to-Date Overview
The year-to-date total for 2025 has reached 806,383 layoffs, which is a staggering 75% increase over the corresponding period in 2024. This figure has already exceeded last year’s total by 6%, making it the highest total for January through July since 2020, when shutdowns caused job losses to surpass 1.8 million.
The Role of Artificial Intelligence in Layoffs
One of the key factors driving the increase in layoffs this year is the rise of artificial intelligence. Reports indicate that automation and AI have already been linked to over 20,000 job cuts this year, with more than 10,000 occurring just in July.
Insights from Labor Experts
Andrew Challenger, a senior vice president at Challenger, Gray & Christmas, pointed out that federal budget cuts initiated by the Department of Government Efficiency (DOGE) are impacting various sectors, including nonprofits and healthcare. He noted, “AI was cited for over 10,000 cuts last month, and tariff concerns have affected nearly 6,000 jobs this year.”
Post-Pandemic Employment Trends
Fabian Stephany, an assistant professor at the University of Oxford, suggests that the recent layoffs might be attributed to a mix of “late-cycle cost discipline and post-pandemic normalization.” This isn’t necessarily a sign of a full-scale downturn in employment, he explains.
Corporate Adjustments and Job Security
Many firms are reassessing their staffing levels in light of the overhiring that took place from 2021 to 2022. Companies are now focusing on preserving profit margins through productivity gains, which are often enabled by automation, as Stephany highlighted.
Automation’s Impact on Labor Market
Stephany further noted that AI’s immediate effects are primarily felt in transactional, routine, and standardized jobs—especially in entry-level positions. This trend is contributing significantly to the current wave of layoffs.
The “Three D’s” of Job Losses
Jason Leverant, COO of AtWork Group, explained that automation primarily impacts jobs categorized as the “Three D’s”: dull, dirty, or dangerous. He emphasized that many white-collar roles deemed “dull” are already being supplanted by AI technologies.
Gradual Reshaping of the Labor Market
Both Leverant and Stephany warn that AI will continue to reshape the labor market throughout this year, albeit in a gradual manner through attrition and slower hiring processes rather than abrupt layoffs.
Dramatic Government Workforce Downsizing
Significant layoffs in 2025 have also stemmed from the federal government, which has seen a total of 292,294 job cuts this year alone. This is largely due to the aggressive downsizing efforts pursued by Trump’s Department of Government Efficiency (DOGE).
Private Sector Restructuring Amidst Changing Needs
In the private sector, layoffs are largely concentrated in industries facing structural pressures. Technology and telecommunications companies are trimming their workforce as they redirect investments towards AI and cloud infrastructure. Meanwhile, retailers are contending with shifting consumer habits and tighter budgets, which have led to store closures.
Financial Sector Caution
Other sectors experiencing a spike in job cuts include finance, business services, and transportation. Firms are scaling back operations following aggressive expansions made during the pandemic.
Economic Factors and Uncertainty
According to reports, around 170,000 job cuts this year are attributed to various economic conditions, including inflation, demand fluctuations, and global instability. Corporate restructuring, store closures, and bankruptcies have also played a role in driving layoffs.
FAQs
Why are so many people getting laid off in the US this year?
Job cuts are being influenced by a combination of factors, including AI adoption, government downsizing, economic uncertainty, and corporate restructuring.
Is AI really taking over jobs?
Yes, automation and AI have been linked to over 20,000 layoffs this year, predominantly affecting routine, junior-level roles and administrative tasks.
What impact has government downsizing had on layoffs?
Government downsizing has led to substantial layoffs, with federal agencies cutting hundreds of thousands of jobs, significantly impacting nonprofits and contractors reliant on public funding.
Which sectors are most affected by layoffs?
The most affected sectors include technology, retail, finance, and business services, with layoffs driven by shifts in consumer behavior and restructuring.
How are companies responding to the need for layoffs?
Many companies are re-evaluating their staffing needs in light of previous overhiring, focusing on increasing productivity through automation and adjusting their workforce accordingly.
