The job market did two opposite things at once. It added 172,000 jobs in May. But it also saw 97,006 layoffs get announced.
What did companies blame most? AI.
AI Is Now The Top Reason For Layoffs
For the third month in a row, AI led all reasons for job cuts. It was tied to 38,579 cuts in May.
That is about 40% of the total, per Challenger, Gray & Christmas. It was also the most ever for that reason.
The firm has tracked AI cuts since 2023. This was the highest month yet.
Layoffs have now climbed three months straight. May beat last May's total by 3%, and topped April's by 16%.
The pain is not spread evenly, though. A few fields take the brunt while others hold up.
"The labor market is being reshaped by technology in real time," said Andy Challenger. He is the firm's chief revenue officer.
The group doing most of the cutting is the one building that technology.
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Tech Is Leading The Cuts
Tech firms cut 38,242 jobs in May. That was their worst month since August 2024.
Zoom out and it looks worse. Tech has shed 123,653 jobs in 2026 so far.
That is up 66% from this point last year. No other sector is close.
Challenger pushed back on the panic, though. He compared AI to spreadsheets and email. Those tools scared workers at first. But they ended up making people faster, not jobless.
"AI isn't yet the jobpocalypse some predicted," Challenger said. Still, firms cite it more than any other reason.
His point is simple. AI will change work, and the open question is how fast.
The Cuts Go Beyond AI
Other reasons are climbing too. Bankruptcies drove 5,637 layoffs in May.
That was the most since early 2025. Cuts tied to mergers jumped more than six-fold from a year ago.
Transportation was the next hardest hit after tech, with 6,909 cuts. Services firms cut 6,268 more.
Healthcare and product makers have cut 30,414 jobs so far this year. That is up 17% from a year ago.
Weak markets and soft demand were cited for 69,645 cuts this year. Store and plant closings added 66,733 more.
Add it up and one story stands out. Firms are reshuffling fast to get set for an AI-driven economy.
Worth Noting
A layoff plan is not the same as a job loss tomorrow. These are plans, and new hiring can offset them.
That is just what May's jobs gain showed. Challenger still sees a deeper shift at work.
Firms are restructuring fast, he said, to get set for an AI-driven economy. For now, the economy is hiring and firing at once.
And AI keeps showing up on the firing side.
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