CHICAGO — Companies are increasingly pointing to one culprit when they cut jobs: artificial intelligence. For the first time, AI has become the single most common reason U.S. employers cite for layoffs — a milestone that says as much about how companies talk about AI as it does about what the technology is actually doing.

The finding comes from outplacement firm Challenger, Gray & Christmas, which reported Thursday that AI was cited for 38,579 job cuts in May, representing 40% of all layoffs announced during the month — the highest monthly total since the firm began tracking the category in 2023.

“AI is now the leading reason companies give for cutting jobs,” said Andy Challenger, the firm’s chief revenue officer.

The rise has been dramatic.

AI’s share of monthly job cuts climbed from just 7% in January to 25% in March, 26% in April, and 40% in May. For the year, AI has been cited in 87,714 layoffs, representing 22% of all announced job cuts in 2026 — already well above the 54,836 cuts attributed to AI during all of 2025.

The overall pace of layoffs is increasing as well.

Employers announced 97,006 job cuts in May, up 16% from April and the highest May total since the pandemic-disrupted labor market of 2020. It marked the third consecutive monthly increase, following 48,307 cuts in February, 60,620 in March, and 83,387 in April.

But economists caution against assuming the figures prove artificial intelligence is directly replacing workers on a broad scale.

The key limitation is that the data reflects what companies say caused the layoffs rather than independently verified evidence. Daniel Zhao, chief economist at Glassdoor, has warned against taking corporate explanations at face value, noting that companies can attribute cuts to AI even when other factors are involved.

Some researchers believe the technology may sometimes serve as a convenient explanation for broader restructuring efforts.

Fabian Stephany of the Oxford Internet Institute has expressed skepticism that many of the reported layoffs reflect genuine AI-driven efficiency gains, arguing that the technology can provide management with a readily understandable rationale for workforce reductions that might have occurred anyway.

Meanwhile, the broader labor market remains surprisingly resilient.

The Bureau of Labor Statistics reported Friday that U.S. employers added 172,000 jobs in May, more than double the roughly 80,000 economists expected, while prior months were revised upward.

Daniel Keum, a management professor at Columbia Business School, said the labor market is “humming along just fine” and described AI’s impact as remaining “very concentrated” in a handful of industries, particularly technology.

That concentration is difficult to miss.

The technology sector accounted for 38,242 of May’s announced job cuts, the highest monthly total since August 2024. The wave comes as major corporations redirect enormous amounts of capital toward artificial intelligence projects.

Companies including Meta, Cisco Systems, and Block have all cited AI as part of restructuring efforts. Meta recently notified roughly 8,000 employees of layoffs while simultaneously increasing spending on AI infrastructure and development.

In many cases, companies are reducing headcount in one part of the business while aggressively investing and hiring in another.

For workers, the bigger challenge may not be layoffs themselves but the slowdown in hiring.

Through May, employers announced only 80,472 planned hires, which Challenger described as historically low compared with pre-pandemic levels. Even when opportunities exist, they often do not align with the skills of displaced workers.

“The jobs that are open aren’t replacing the jobs that are lost,” said Thomas Thompson, chief economist at Havas Edge, noting that a laid-off biopharmaceutical engineer is unlikely to transition directly into a warehouse logistics position.

For job seekers, economists recommend flexibility.

Zhao advises workers to broaden their search, focus on industries that are expanding, and recognize that many skills transfer across sectors. He also argues that disruption — whether from technology, politics, or broader economic shifts — is becoming a permanent feature of the labor market.

Andy Challenger sees the trend as something larger than a passing cycle.

“The labor market is being reshaped by technology in real time,” he said, describing the shift as a structural change rather than a temporary phenomenon.

Whether artificial intelligence is truly eliminating these jobs or simply providing companies with a convenient explanation, the practical reality for workers is similar: layoffs remain elevated, hiring is subdued, and the rules of the labor market are evolving faster than many employees can adapt.

JBizNews Desk — Labor & Employment

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