US job cuts surge 66% as DOGE and AI reshape workforce, northeast corridor most affected

U.S. job cuts surged 66% year-over-year through August, reaching 892,000 announced layoffs—already exceeding 2024’s total and marking the highest levels since the COVID-19 pandemic. The Trump administration’s Department of Government Efficiency (DOGE) initiative has driven massive federal workforce reductions, while economic uncertainty and AI adoption continue reshaping employment across tech, finance, and retail sectors.

The big picture: Government cost-cutting through DOGE has become the primary driver of job losses, with Washington D.C. seeing cuts triple to 294,696 positions this year.

• California leads states in private sector cuts with 135,241 layoffs, representing a 24% increase from last year.
• “After the impact of DOGE on the Federal Government, employers are citing economic and market factors as the driver of layoffs,” said Andrew Challenger, senior vice president at Challenger, Gray & Christmas, a career transition consulting firm.

AI’s growing impact: Artificial intelligence has directly contributed to 10,375 job cuts this year, with broader technological updates accounting for an additional 20,219 positions.

• Tech companies announced 102,239 job cuts, down just 3% from last year despite heavy AI investments.
• Intel, Microsoft, Meta, and Salesforce have all reduced workforces while simultaneously pouring resources into AI development.
• The rise of AI chatbots capable of generating text and code has heightened worker anxiety about job automation.

Retail sector under pressure: Retailers face a perfect storm of challenges that could worsen during the critical holiday season.

• “Retailers are being hard hit by tariffs, inflation, and ongoing economic uncertainty, causing bankruptcies and closures,” Challenger noted.
• Major retailers like Kroger announced massive job cuts, while Claire’s filed for bankruptcy amid mall shopping decline.
• “If tariffs and consumer spending constraints play out, the approaching holiday shopping season may see fewer seasonal hires and, in fact, high layoffs.”

Regional variations: While some states saw dramatic increases, others bucked the trend entirely.

• New York experienced a 33% jump in job cuts, while Texas and Nevada actually saw decreases.
• The data comes from Challenger, Gray & Christmas, which tracks announcements through news reports, company filings, and layoff notices.

Why this matters: These layoff levels haven’t been seen since 2020’s pandemic-driven economic disruption, signaling that multiple forces—from government efficiency drives to AI transformation—are fundamentally reshaping the American workforce landscape.