Signs of cooling in the U.S. job market: The number of layoffs by companies this year has reached a new high since 2020

The U.S. job market is showing signs of cooling.

On November 3rd, it was reported that the employment consulting firm Challenger, Gray & Christmas released a report indicating that as of September this year, the number of layoffs announced by U.S. companies has approached 950,000, the highest level for the same period since 2020. This figure has surpassed the total number of layoffs in any complete year since 2009, except for the first year of the COVID-19 pandemic.

Since the beginning of this year, a series of well-known companies, from Starbucks to Amazon, from Target to Southwest Airlines, have announced large-scale layoffs. Starbucks cut 900 corporate employees in September, Target reduced 1,800 positions in October, and Amazon attributed the layoff of 14,000 corporate positions to artificial intelligence. Although each company provided its own explanation, economists are beginning to worry that these layoffs may no longer be isolated cost-cutting actions, but rather economic warning signals.

Dan North, a senior economist at Allianz Trade Americas, stated, "A large number of established companies are undergoing significant layoffs," and these layoffs may "not be happening randomly." While Federal Reserve Chairman Jerome Powell believes the labor market is only "cooling very slowly," the market is highly alert to signs of further deterioration.

Analysts believe that driven by artificial intelligence and automation technology, coupled with companies cutting labor costs to absorb tariff expenses, management is losing concerns about layoffs. This trend marks a shift in the U.S. labor market from the post-pandemic "low hiring, low firing" model.

Layoff Wave Affects Multiple Industries

Government departments have become a major area for layoffs. According to Challenger, nearly 300,000 government positions have been cut this year.

At the same time, the wave of layoffs has also swept through industries such as technology and retail, with Southwest Airlines announcing its first large-scale layoffs in the company's history this year. Companies have provided different reasons for the layoffs:

Amazon attributed the reduction of 14,000 corporate positions to artificial intelligence, Paramount cut 1,000 employees after completing a merger, and Molson Coors reduced 400 positions due to declining beer sales caused by increased consumer health awareness. Starbucks has conducted two rounds of layoffs this year, with the September cut of 900 corporate employees being part of the new management's business revitalization plan.

Excluding the first year of the COVID-19 pandemic in 2020, the number of layoffs in the first nine months of this year has exceeded the total number of layoffs in any complete year since 2009. North stated, "When a certain data point is 'almost the worst since the Great Recession,' this is not an encouraging number."

Market Alert to Further Deterioration

Federal Reserve Chairman Powell stated that he sees the labor market "cooling very slowly, but that's all." However, the market remains highly vigilant for signs of further deterioration Citigroup economist Veronica Clark stated that if the number of initial jobless claims continues to reach or exceed 260,000, rather than remaining in the range of 220,000 to 240,000 for most of the past year, it would be more concerning.

Cory Stahle, a senior economist at job search website Indeed, mentioned that he is closely monitoring more layoffs outside the tech industry, including in transportation and retail, "this is where it really starts to become worrisome."

Shift in Labor Market Patterns

Analysts point out that the U.S. labor market is undergoing a structural transformation.

Previously, the U.S. was in what economists call a "low hiring, low firing" economic state. Even when filling vacant positions slowly, most companies resisted direct layoffs, even hoarding workers for future needs. This behavior is partly rooted in the hiring difficulties during the pandemic, when both the number of job vacancies and turnover rates hit record highs.

Clark stated that now "there are a lot of available workers, and overall, companies may feel there is no need to retain workers longer than necessary." North more bluntly pointed out, "We are no longer just in a low hiring, low firing environment; we are laying off workers."

However, the scale and speed of current layoffs indicate that driven by advancements in artificial intelligence and automation technology, management is increasingly losing concerns about layoffs.

Earlier this year, a LinkedIn survey showed that over 60% of executives believe that AI will eventually take over some tasks currently performed by junior employees.

Meanwhile, many large companies are choosing to absorb the increased costs of tariffs rather than passing the entire tariff cost onto consumers in the form of price increases, opting instead to cut labor costs to protect profits.

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