Dive Brief:
- Artificial intelligence was the leading reason cited for U.S. job cuts for the third consecutive month in May, accounting for a record 38,579 announced layoffs, outplacement firm Challenger, Gray & Christmas said in a report Thursday.
- The figure marks the highest monthly total attributed to AI since the outplacement firm began tracking the category in 2023. AI accounted for 40% of all job cuts announced during the month, up from 26% in April and just 7% in January.
- “The labor market is being reshaped by technology in real time,” Andy Challenger, chief revenue officer at the Chicago-based firm, said in the report. “AI is now the leading reason companies give for cutting jobs and the primary industry citing it is technology.”
Dive Insight:
While economic uncertainty, restructuring efforts and market conditions continue to contribute to layoffs, AI has emerged as the most frequently cited reason for workforce reductions in recent months.
For the year, employers have cited AI in 87,714 planned layoffs, representing 22% of all announced job cuts in 2026. The total has already surpassed the 54,836 AI-related cuts recorded during all of 2025.
Coinbase CEO Brian Armstrong announced in May that his company was cutting 14% of its workforce, attributing the move in part to AI.
“Over the past year, I’ve watched engineers use AI to ship in days what used to take a team weeks,” he said in a memo to employees that was later shared on social media platform X. “Non-technical teams are now shipping production code and many of our workflows are being automated. The pace of what's possible with a small, focused team has changed dramatically, and it's accelerating every day.”
Meanwhile, Cisco Systems said last month that it planned to cut nearly 4,000 jobs — representing less than 5% of its workforce — in a broad restructuring aimed at sharpening its focus on AI and other high-growth areas.
While tech companies are leading job-cut announcements, they also remain among the most active sectors when it comes to hiring plans. The sector led May hiring with 11,250 announced positions, followed by electronics with 3,158 and insurance with 1,435, according to the Challenger report.
Overall, U.S. employers announced 397,755 cuts in the first five months of the year, down 43% from the 696,309 announced during the same period in 2025, when reductions to the federal workforce drove totals to historic highs, Challenger said.
“Stripping out that distortion, 2026 is running roughly even with 2024, when 385,859 cuts were announced through May,” according to the research.
