Employers in the United States have been laying off workers in higher numbers in May, where artificial intelligence (AI) was found to be the principal cause cited for the layoffs. New information released by Challenger, Gray & Christmas indicates that companies are quick to adapt to workforce changes as the application of AI continues to increase in various sectors.
In May, there were 97,006 announced layoffs in the United States. This was an increase of 16 percent from April, where there were 83,387 announced layoffs. Compared to last year, May also saw a 3% increase from the 93,816 laid-off workers.
For the third consecutive month now, AI has continued to lead the list of reasons cited by employers as causing their layoffs. In May alone, employers cited 38,579 layoffs due to AI. This number accounts for nearly 40% of the total number of announced layoffs in May and is the highest ever seen since Challenger started monitoring AI layoffs in 2023.
Andy Challenger, the company’s chief revenue officer and labor market expert, said that technology is evolving rapidly. According to him, AI is the principal reason cited for layoffs and particularly so in the technology industry.
The technology industry experienced a total of 38,242 job cuts in May, representing the most adversely impacted industry of the month. For the year to date, tech firms have announced a total of 123,653 job cuts. This marks an increase of 66% over the same period in 2025.
AI’s Dual Role in Efficiency and Workforce Disruption
Even as AI-related job losses continue to rise, Challenger dismissed the idea that AI could be considered a substitute for all employees. He cited the example of AI being similar to spreadsheets and e-mails in terms of transforming work methods while increasing efficiency. Nevertheless, he added that the present numbers prove that corporations are already using AI as an excuse to lay off employees.
The main issue is no longer about whether or not AI will impact jobs but about how soon it happens.
Away from the technology industry, some other sectors have also seen some serious job losses. The transport industry witnessed a total of 6,909 job cuts in May. This brings the year-to-date total number of job cuts to 40,388, marking a whopping 449% jump in the number seen last year.
The services industry laid off 6,268 workers in May. However, for the entire year, the number of job cuts in the services industry stood at 17,065, which is a drop by 61% when compared to the figure from the same period in 2025.
Analyzing Job Cut Drivers and Economic Shifts in 2026
Other industries which announced job cuts included healthcare and product manufacturing industries. The number of job cuts announced in the aforementioned industries in the first half of 2026 is 30,414, which marks an increase of 17% over the corresponding figure for the previous year.
It should be noted here that even as AI is a contributory factor in job cuts, businesses have continued to be under economic pressure, shifting market scenarios, and corporate restructurings.
The second major cause of job cuts after AI was declared to be bankruptcy, with a figure of 5,637 job cuts being announced by employers for May. This marked a record for the month of May since February 2025.
Furthermore, market and economic conditions have played a big part in workforce reductions. These factors were behind a total of 69,645 layoffs reported in 2026. Another reason for layoffs that year was the closure of company operations; 66,733 employees were made redundant due to this factor.
How M&A and AI are Reshaping the American Workforce?
The increasing importance of M&A as a cause of layoffs should also be noted. Mergers have resulted in 11,989 layoffs in 2026, which amounts to almost seven times more layoffs due to M&A than in 2025 (1,889 layoffs). These figures could indicate that organizations are undergoing restructuring ahead of the future dominated by AI and automation, which involves analyzing their workforces, implementing new technology, and merging operations or acquiring other businesses.
It is worth mentioning the growing expenditure of large organizations on AI development. Multimillion-dollar investments are being made into data centers, software, and computational hardware that enable the implementation of AI systems. Organizations that are implementing AI solutions tend to seek means of improving operational efficiency and saving on expenses.
Although fears about mass job displacement have yet to come to fruition, current statistics indicate that the influence of AI on recruitment practices is already happening. The employers are not sitting around and waiting for the future; they are taking actions right now.
Time will tell if AI generates enough new jobs to balance out those lost. Until then, one thing is certain: AI has gone from the future possibility it once was into a very real presence in the American job market.
