Signs of a cooling U.S. job market emerge: Corporate layoffs this year reach highest level since 2020

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The U.S. job market is sending signals of cooling down.

On November 3, reports indicated that according to a report released by U.S. employment consulting firm Challenger, Gray & Christmas, as of September this year, the number of layoffs announced by U.S. companies has approached 950,000, marking the highest level for the same period since 2020. This number has already exceeded the annual total layoffs for any full year since 2009, except for the first year of the COVID-19 pandemic.

Throughout this year, a series of well-known companies—from Starbucks to Amazon, from Target to Southwest Airlines—have successively announced large-scale layoffs. Starbucks cut 900 corporate employees in September, Target eliminated 1,800 positions in October, and Amazon has cut 14,000 corporate jobs, citing artificial intelligence as the reason. Although each company has given 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, Senior Economist at Allianz Trade Americas, stated, "Many established companies are conducting fairly large-scale layoffs", and these layoffs may "not be occurring randomly." Although Fed Chairman Powell believes the labor market is "cooling off very slowly," the market is highly alert to any signs of further deterioration.

Analysts point out that, driven by artificial intelligence and automation technologies, as well as companies cutting labor costs to absorb tariff expenses, management is losing its reservations about layoffs. This trend signifies that the U.S. labor market is shifting from the post-pandemic "low hiring, low firing" model.

Layoffs Spread Across Multiple Industries

Government departments have become a hard-hit area for layoffs. According to Challenger statistics, nearly 300,000 government positions have been eliminated this year.

At the same time, the wave of layoffs has also swept through industries such as technology and retail, with Southwest Airlines announcing corporate layoffs this year for the first time in company history. Different companies have provided different reasons for their layoffs:

Amazon attributed the cut of 14,000 corporate positions to artificial intelligence, Paramount laid off 1,000 employees after completing a merger, and Molson Coors cut 400 positions due to declining beer sales caused by greater health awareness among consumers. Starbucks has had two rounds of layoffs this year, with the cut of 900 corporate employees in September being part of the new management's business revival plan.

Excluding the first year of the coronavirus pandemic in 2020, the number of layoffs in the first nine months of this year has already surpassed the total annual number for any full year since 2009. North stated, when a particular figure is "almost the worst since the Great Recession," "that is not an encouraging number."

Market Alert to Further Deterioration

Fed Chairman Powell said he has seen the labor market "cooling very slowly, but that's all." However, the market remains highly vigilant for further signs of deterioration.

Veronica Clark, an economist at Citigroup, noted that, if the number of initial jobless claims continues to reach or exceed 260,000, rather than remaining in the 220,000–240,000 range as in most of the past year, there will be more concern.

Cory Stahle, Senior Economist at job site Indeed, said he is closely watching for more layoffs outside the tech sector, including in transportation and retail, "that’s where it really starts to get worrying."

Labor Market Model Transformation

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

Previously, the U.S. was in what economists call a "low hiring, low firing" economic state. Even when slow to fill vacancies, most companies still resisted direct layoffs, even hoarding workers for future needs. This behavior partly stemmed from recruitment difficulties during the pandemic, when job vacancies and quit rates both reached record highs.

Clark said that now, "there is a large pool of available workers, and overall, companies may feel it unnecessary to retain workers longer than necessary." North put it more bluntly: "We are no longer in just a low hiring, low firing environment; we are laying people off."

However, the current scale and speed of layoffs indicate that, driven by advances in artificial intelligence and automation technologies, management is more broadly losing reservations about layoffs.

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

At the same time, many large companies are choosing to absorb increased tariff costs instead of passing all of them on to consumers through price hikes, opting instead to cut labor costs to protect profits.

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