October Witnesses Record Job Losses in Over Two Decades
With the rise of artificial intelligence (AI) transforming industries, October experienced an unprecedented rise in job cuts, the highest in the month for the past 22 years. This could be an indicator of upcoming challenges for the employment sector.
The total job cuts in October amounted to 153,074, showing a dramatic increase of 183% from September and a 175% rise compared to the same month the previous year. The last time job cuts were this high in October was back in 2003. This year has been the toughest in terms of announced layoffs since 2009.
Disruptive Technology Impacts Job Market
Experts suggest that disruptive technology, similar to 2003, is reshaping the landscape. Given that job creation is at its lowest in recent years, the announcement of layoffs in the last quarter of the year doesn’t look promising.
This information provides a snapshot of the labor market during a period when the government has halted data collection and release due to the shutdown in Washington, D.C.
Layoffs Yet to Reflect in State-Level Data
It's important to note that these monthly numbers can fluctuate greatly. Despite the layoffs, state-level weekly jobless claim filings that continue to come in amidst the shutdown don't show a significant rise in layoffs. Furthermore, October witnessed a net job growth of 42,000, a welcome turnaround after two consecutive months of losses in the private sector.
However, this report is released at a time when Federal Reserve officials are voicing concerns about a weakening labor market. The central bank has already reduced its benchmark interest rate twice since September and is expected to approve another quarter percentage point reduction in December to prevent any serious issues.
Technology Sector Hit the Hardest
The technology sector, undergoing restructuring due to AI integration, reported the highest level of layoffs. Companies in the sector announced 33,281 cuts, nearly six times the level in September.
Consumer products also experienced a significant increase to 3,409, while nonprofits, a sector severely affected by the shutdown, reported 27,651 cuts this year, a staggering 419% increase from the same period in 2024.
Job Cuts Reach New Highs
In total, companies have announced 1.1 million cuts this year, a 65% increase from the previous year and the highest level since the Covid pandemic year of 2020. October saw the highest total for any month in the fourth quarter since 2008.
"Some sectors are adjusting after the hiring surge of the pandemic, but this coincides with AI adoption, softening consumer and corporate spending, and rising costs leading to cost-cutting and hiring freezes. Those laid off now are finding it harder to quickly secure new roles, which could further loosen the labor market," said a workplace expert.