Layoffs are raising their heads again in the United States. Analysis suggests that companies are expanding workforce restructuring in preparation for economic slowdown and government budget cuts. In particular, the scale of layoffs announced this year has soared to the highest level since the early pandemic, heightening corporate management tension.
According to the business consulting firm Challenger, Gray & Christmas, the total number of layoffs announced in the United States so far this year has reached 696,309. This is the highest figure since over 1.4 million people lost their jobs in the first five months of 2020 during the initial COVID-19 spread.
While layoffs announced in May decreased compared to the previous month, they increased by 47% compared to the same month last year. Experts are noting that this trend is not a temporary phenomenon. Andrew Challenger, the senior vice president of Challenger, diagnosed that "tariff policies, budget cuts, depressed consumer sentiment, and overall pessimism about the economy are directly impacting corporate employment strategies".
In particular, the U.S. federal government's budget execution restructuring has been shown to have a profound impact on the employment front. Analysis suggests that the intense budget cuts and workforce reduction of the department named 'Efficiency Department (Doge)' have spread to the private sector like a domino effect, leading to overall restructuring. In fact, Doge-related direct layoffs, as well as external organizations and companies dependent on government funds, have been reducing staff, with Doge-related factors accounting for more than one-third of the total layoff scale.
Companies announcing layoffs this year are also expanding across industries unlike before. Recently, Procter & Gamble (PG) announced plans to reduce 7,000 office workers within two years, and Microsoft (MSFT), Morgan Stanley (MS), Walmart (WMT), and CrowdStrike (CRWD) have also disclosed large-scale layoff plans.
However, there are also opinions that this report, which is compiled based only on announced layoff announcements, cannot fully reflect the actual changes in the employment market. Experts are expecting to confirm a more specific and precise employment environment through the official employment report from the U.S. Department of Labor to be released on the 6th (local time).
This report is clearly a warning for both employees and job seekers. As employment insecurity deepens again after the pandemic, it is necessary to watch what additional ripple effects government policies and consumption changes will bring to the labor market.
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