AI emerges as top cause of job cuts in US, outpacing past two years: Report

Artificial intelligence has become the leading cause of job cuts in the US in 2026, accounting for nearly 40% of layoffs in May. AI-linked reductions have already surpassed the combined total of the previous two years, with tech sectors hardest hit

New Delhi: Artificial intelligence has emerged as the leading reason behind job cuts in the United States this year, with AI-driven layoffs in the first five months of 2026 already surpassing the combined total recorded over the previous two years, according to a report by outplacement firm Challenger, Gray & Christmas.

The report showed that US employers announced more than 97,000 job cuts in May 2026, making it the highest May layoff total since the onset of the Covid-19 pandemic in 2020.
Workforce reductions have increased steadily for three consecutive months, rising from 48,307 in February to 60,620 in March, 83,387 in April and over 97,000 in May.

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According to the report, artificial intelligence accounted for nearly 40 per cent of all announced layoffs in May — highlighting the growing impact of automation on employment.

The share of AI-related job cuts has risen sharply throughout the year, climbing from 7 per cent in January to 10 per cent in February, 25 per cent in March and 26 per cent in April before surging further in May.

In May alone, companies attributed 38,579 job cuts to automation and AI adoption, the highest monthly figure since Challenger, Gray & Christmas began tracking AI-related layoffs in 2023. The latest numbers pushed the total count of AI-linked job cuts in 2026 to 87,714.

The report noted that this figure has already exceeded the combined AI-related layoffs recorded in the previous two years, which stood at 54,836 in 2025 and 12,742 in 2024.

AI is now the leading reason companies give for cutting jobs, said Andy Challenger, chief revenue officer of Challenger, Gray & Christmas, underscoring the accelerating role of automation in workforce restructuring.

The technology sector emerged as the worst affected industry. US-based technology companies announced 38,242 job cuts in May, marking the highest monthly total since August 2024.

On a year-to-date basis, layoffs in the technology sector have jumped 66 per cent to 1.23 lakh, making it the hardest-hit industry in the US job market.

According to the report, the sector has recorded nearly three times as many job cuts as the next most affected industry.