U.S. employers announced just over 97,000 job cuts in May 2026, according to a report released Thursday by outplacement firm Challenger, Gray & Christmas.
The announced cuts represent the highest May number since 2020, at the start of the Covid-19 pandemic, according to Challenger’s data. It’s also the third straight month that layoffs have risen this year, up from the 83,387 cuts reported in April, 60,620 in March and 48,307 in February.
According to the report, which is based on company announcements of job cuts, employers cited AI as the primary reason for almost 40% of May’s announced job cuts, up from 7% in January, 10% in February, 25% in March and 26% in April. The May number brings the total announced job cuts attributed to AI in the first five months of 2026 to 87,714, up from 54,836 throughout all of 2025.
“AI is now the leading reason companies give for cutting jobs,” Andy Challenger, chief revenue officer of Challenger, Gray & Christmas, said in the report.
But that doesn’t mean it’s time to panic about AI’s “doomsday potential” for the job market, according to Daniel Keum, associate professor of management at Columbia Business School.
On a macro level, the labor market is “humming along just fine,” Keum says. The Bureau of Labor Statistics reported Friday that U.S. payrolls rose by 172,000 in May, over double the Dow Jones consensus estimate of 80,000, and released upward revisions for previous months: April saw a boost up to 179,000, a gain of 64,000, while March got an upward revision of 29,000 to 214,000.
In Keum’s view, AI’s impact on jobs is still “very concentrated” within certain sectors, namely the tech industry, which reported 38,242 total cuts in May, according to Challenger’s data.
Daniel Zhao, chief economist at Glassdoor, cautions against taking companies’ assertions about AI-related layoffs at face value. “A company can say [AI] is why we’re doing layoffs, but that doesn’t necessarily mean that’s actually why those layoffs are happening,” he says.
Some companies may be “scapegoating” AI to justify layoffs, Fabian Stephany, assistant professor of AI and work at the Oxford Internet Institute, told CNBC in October. “I’m really skeptical whether the layoffs that we see currently are really due to true efficiency gains. It’s rather really a projection into AI in the sense of ‘We can use AI to make good excuses,'” he said.
At the same time, “there are definitely a lot of companies that are changing how they are allocating resources” in response to AI, Zhao says.
That could mean that a company cuts jobs in certain areas — Keum cites Meta’s Reality Labs layoffs as an example — but continues to invest and hire in others.
While job growth numbers may be stronger than expected for May, Zhao notes that many workers are still anxious about layoffs and worry about their job prospects due to overall “sluggish hiring” in recent months. Employers announced 80,742 planned hires in May, according to the Challenger report, which described the hiring numbers as “historically low by prepandemic standards.”
Part of the problem for workers is that “the jobs that are open aren’t replacing the jobs that are lost,” says Thomas Thompson, chief economist at Havas Edge, a performance marketing agency. For example, “someone who was an engineer in biopharmacy and had their job replaced with AI isn’t going to be interested in a logistic warehouse job,” he says.
Still, Zhao advises job seekers to “diversify their approach” in the current market, including exploring other fields. His advice is to “look for jobs that are similar within industries that are growing.”
“I think many people focus on the industries or the jobs where they’ve worked in the past,” he says. “But many of those skills are applicable across many different fields.”
Given the pace at which technology and economic conditions are evolving, Zhao says that job seekers should also “expect the unexpected.”
“There is going to be more disruption in the future, whether that’s coming from AI, whether that’s coming from political uncertainty, whether it’s coming from other parts of the economy,” he says. “That is the world that we are in today.”
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