Layoffs have become one of the most defining and unsettling features of the U.S. labor market in 2025, with artificial intelligence now sitting at the center of corporate explanations for sweeping job cuts.
Across technology, finance, enterprise software, and cybersecurity, companies are increasingly framing workforce reductions as a necessary consequence of rapid AI adoption, even as questions grow over whether automation is the sole or even primary driver.
Figures from consulting firm Challenger, Gray & Christmas, published by CNBC, show that AI-linked layoffs reached nearly 55,000 jobs in the United States this year. In total, employers announced about 1.17 million job cuts through 2025, the highest annual level since the height of the Covid-19 pandemic in 2020, when layoffs surged to 2.2 million. The scale and persistence of the cuts suggest a structural reset rather than a temporary correction.
The pace of job losses has remained elevated into the final quarter of the year. Employers announced roughly 153,000 job cuts in October, followed by more than 71,000 in November. AI was explicitly cited in over 6,000 of the November cuts alone, according to Challenger, underscoring how frequently the technology now features in restructuring announcements.
These layoffs are unfolding against a challenging economic backdrop. Inflation continues to erode purchasing power, tariffs have added to input costs, and borrowing remains expensive after years of aggressive interest rate hikes. For many firms, especially large multinationals under pressure to protect margins, AI has emerged as an appealing lever. Automation promises immediate efficiency gains, lower payroll costs, and faster execution, particularly in roles involving repetitive cognitive tasks.
Academic research is reinforcing those incentives. CNBC cited a study released by the Massachusetts Institute of Technology in November, which found that AI systems can already perform tasks equivalent to about 11.7% of jobs across the U.S. labor market. The researchers estimated potential wage savings of up to $1.2 trillion, with the largest exposure in finance, healthcare, legal services, and other professional sectors where routine analysis, documentation, and customer interaction are common.
Yet not everyone agrees that AI alone explains the scale of the layoffs. Fabian Stephany, assistant professor of AI and work at the Oxford Internet Institute, has argued that many companies are overstating the role of automation. He has said that firms that expanded aggressively during the pandemic-era boom are now reversing course, using AI as a convenient narrative.
“Many companies significantly overhired during Covid,” Stephany previously told CNBC. “Instead of saying ‘we miscalculated two or three years ago,’ they can now point to AI as the reason.”
In his view, a portion of the layoffs represents a delayed market correction rather than a sudden technological displacement.
Even so, corporate leaders have been unusually candid about AI’s role in reshaping their organizations.
Amazon announced in October the largest round of layoffs in its history, cutting 14,000 corporate roles as it redirects spending toward what it describes as its “biggest bets,” with AI at the top of the list. In a blog post, Beth Galetti, the company’s senior vice president of people experience and technology, said the shift was necessary to reduce layers, speed up decision-making, and give teams more ownership.
CEO Andy Jassy had earlier warned employees that AI would fundamentally change Amazon’s workforce. He said the company would need “fewer people doing some of the jobs that are being done today, and more people doing other types of jobs,” signaling a long-term rebalancing rather than a short-term cutback.
Microsoft has taken a similar path. The company has cut around 15,000 jobs in 2025, including 9,000 announced in July. CEO Satya Nadella framed the layoffs as part of a broader effort to reposition Microsoft around AI, describing a transition from a traditional software model to what he called an “intelligence engine.”
In an internal memo, Nadella emphasized that AI was not just another product line but a foundational shift.
“It’s about building tools that empower everyone to create their own tools,” he wrote, arguing that this approach required a different organizational structure and skill mix.
At Salesforce, the impact has been particularly visible in customer support. CEO Marc Benioff confirmed in September that about 4,000 customer support roles had been eliminated, reducing headcount in that division from roughly 9,000 to 5,000. Benioff has said AI is already handling up to half of the company’s workload, allowing it to operate with far fewer staff than before.
IBM’s experience highlights the uneven nature of the transition. CEO Arvind Krishna said in May that AI chatbots had replaced a few hundred human resources roles, but he stressed that the company was simultaneously hiring in areas that demand higher-level judgment, including software engineering, sales, and marketing. Still, IBM announced a 1% global workforce reduction in November, potentially affecting nearly 3,000 employees.
Cybersecurity firm CrowdStrike was among the most explicit in linking layoffs to AI. In May, it said it would cut about 500 jobs, or 5% of its workforce. CEO George Kurtz described AI as a “force multiplier” that flattens hiring needs and accelerates everything from product development to customer engagement, reducing the number of people required to scale the business.
Workday, an HR software company, moved early in the year. In February, it announced plans to cut about 8.5% of its workforce, or roughly 1,750 jobs, to free up resources for AI investment. CEO Carl Eschenbach said the decision was about prioritization, signaling that AI spending had become more important than maintaining existing headcount.
Collectively, these moves point to a deeper shift in how companies value labor. While executives insist that AI will create new roles over time, particularly for engineers, data scientists, and AI specialists, the near-term effect has been a sharp contraction in white-collar and support roles that were once considered relatively insulated from automation.
The result has been growing anxiety about job security and reskilling for workers. For policymakers, it raises difficult questions about how quickly labor markets can adapt and whether existing safety nets are adequate. As 2025 draws to a close, AI’s promise of productivity and innovation is becoming inseparable from its social cost, with layoffs serving as the most visible sign of a labor market being reshaped in real time.
