Catenaa, Sunday, December 21, 2025- The US job market was crowded with layoffs throughout 2025, amid economic uncertainty, and AI was responsible for approximately 55,000 layoffs.
According to consulting firm Challenger, Gray & Christmas, there were in total 1.17 million job cuts through 2025, the highest level since the Covid-19 pandemic in 2020, out of which AI was responsible for 55,000.
In October, US employers announced 153,000 job cuts, and there were over 71,000 job cuts in November, with AI being cited as a factor in over 6,000 of those job cuts for the month, according to Challenger.
At a time when inflation bites, tariffs are adding to expenses, and firms are looking to carry out cost-cutting measures, AI has presented an attractive, short-term solution to the problem.
The Massachusetts Institute of Technology released a study in November showing that AI can already do the job of 11.7% of the US labor market and save as much as $1.2 trillion in wages across finance, healthcare, and other professional services.
Not everyone is convinced that AI is the real reason behind the dramatic job cuts, as Fabian Stephany, Assistant Professor of AI and work at the Oxford Internet Institute.
Stephany told CNBC, many companies that performed well during the pandemic “significantly overhired” and the recent layoffs might just be a “market clearance.”
“It’s to some extent firing people for whom there had not been a sustainable long-term perspective, and instead of saying ‘we miscalculated this two, three years ago, they can now come to the scapegoating, and that is saying ‘it’s because of AI though,’” he added.
