AI fear grows: Tech layoffs reach highest level in two years, claims report

U.S.-based employers announced 97,006 job cuts in May, up 16 per cent from the 83,387 cuts recorded in April and 3 per cent higher than the 93,816 announced in the same month last year, according to a report released recently by global outplacement and executive coaching firm Challenger, Gray & Christmas.

May's total marks the highest level for the month since 2020, when employers announced 397,016 cuts at the height of the COVID-19 pandemic. It also represents the third consecutive month of rising layoffs, with announced cuts climbing from 48,307 in February to 97,006 in May.

So far in 2026, employers have announced 397,755 job cuts, down 43 per cent from the 696,309 announced during the first five months of 2025, when reductions in the federal workforce pushed totals to historic highs.

Excluding that distortion, however, 2026 is tracking roughly in line with 2024, when 385,859 cuts had been announced through May.

Commenting on the trend, Andy Challenger, labour and workplace expert and chief revenue officer at Challenger, Gray & Christmas, said in a statement: "On top of the headline AI story, we're seeing a sharp rise in cuts tied to acquisitions and mergers and a jump in bankruptcy-related losses, which tells me companies are restructuring aggressively as they reposition for an AI-driven economy."

The Technology sector announced 38,242 job cuts in May, the highest monthly total for the industry since August 2024, when 39,563 cuts were recorded. For the year so far, the sector has announced 123,653 cuts, up 66 per cent from the 74,716 reported during the same period in 2025. Technology remains the leading job-cutting sector of 2026 by a wide margin.

"The labor market is being reshaped by technology in real time. AI is now the leading reason companies give for cutting jobs, and the primary industry citing it is Technology. Technology, already the year's biggest job cutter, saw its steepest cuts since early 2023, even as it remains the sector with the most hiring plans this year," Challenger said.

At the same time, Challenger cautioned against alarmist predictions about AI-driven unemployment.

"AI isn't yet the jobpocalypse some predicted. Like spreadsheets and email before it, the technology will ultimately make workers more productive, but our data shows companies are already acting on it, citing AI for more cuts than any other reason. The open question isn't whether AI changes the workforce, but how fast," he added.