In 2025, AI has been a significant factor in the U.S. job market, leading to thousands of layoffs. Major companies like Amazon have cut thousands of roles, citing AI as a key factor, according to The Guardian.
Layoffs are accelerating fast in the U.S., and 2026 is shaping up to be one of the most disruptive job-loss years in decades. This is based on the trajectory established in 2025.
For example, the Massachusetts Institute of Technology released a study in November showing that AI can already do the job of 11.7% of the U.S. labour market and save as much as $1.2 trillion in wages across finance, healthcare, and other professional services.
In the second half of 2025, the company J&Y Law analyzed federal labor records, monthly job-cut reports, and employer disclosures to understand what’s driving this surge. What stands out is not just how large the numbers are, but how persistent and uneven the losses have become across industries and regions.
This matters now because layoffs are rising while hiring is barely moving. Through July 2025, employers created only 86,132 new jobs, even as layoffs continue at roughly 1.6 million per month, a gap that signals a labour market losing workers faster than it can replace them.
U.S. Job Cuts by Sector and Region, 2025 (Year-to-Date):
| Sector / Region | 2025 Job Cuts | YoY Change | Primary Driver |
| Government | 308,167 | +703% | Automation upgrades, federal restructuring |
| Technology | 154,445 | +36% | AI adoption, role consolidation |
| Retail | 92,989 | +249% (July) | Automation, store closures |
| Nonprofit | 17,826 | +413% | Funding pressure, automation |
| Automotive | 4,975 | Highest since Nov 2024 | Tariffs, automation |
| Washington, D.C. | 434,385 | +219% | Federal job cuts, automation |
| Eastern U.S. Total | 540,539 | +173% vs 2024 | Government concentration |
Layoffs have become structural, not temporary
With more than 1.2 million job cuts announced and monthly layoffs averaging 1.6 million, employers are making long-term reductions, not short-term corrections. Historically, this pattern appears when companies expect slower demand to last, not rebound quickly.
Government and policy decisions now drive national job losses
Government job cuts reached 308,167 in 2025, surpassing those in every private-sector industry. Between January and July alone, 292,294 federal and government-linked jobs were eliminated, marking a shift from past downturns that private companies led.
AI and automation are eliminating jobs faster than the market can adjust
At least 54,000 layoffs were directly tied to automation or AI, while tech job losses climbed 36% year over year. Retail followed with a 249% spike in July layoffs, showing that automation now affects white-collar, service, and logistics roles at the same time.
Why This Matters Now
Layoffs tied to AI are accelerating into late 2025 instead of slowing. July’s 62,075 job cuts, up 140% year over year, show momentum is still building. With hiring plans falling to their lowest level since 2010, workers displaced by automation are facing longer unemployment spells, making these numbers a critical early warning signal for 2026 workforce planning and policy coverage.
