US Layoffs Skyrocket to Highest Level Since Pandemic as Tech Giants Blame AI for 40% of Cuts

US layoffs surged to their highest May level since the pandemic in 2020, with employers announcing more than 97,000 job cuts across the country last month and citing artificial intelligence as a key factor in roughly 40% of those decisions, according to data released by Challenger, Gray & Christmas.

The figures, published in June, place fresh scrutiny on how deeply AI is reshaping the labour market, or at least how readily it is being blamed for upheaval that was already under way.

For context, the latest spike comes amid a steady stream of warnings from economists and executives that automation could displace large swathes of the workforce. The May total represents a sharp escalation and the highest for the month in five years, reviving comparisons with the early pandemic period when layoffs surged across multiple sectors.

US Layoffs Data Raises Questions Over AI’s True Role

At first glance, the numbers appear stark. Employers have attributed 87,714 job cuts to AI in the first five months of 2026 alone, already surpassing the 54,836 recorded for the entirety of 2025. That pace suggests not just a trend but an acceleration.

Yet the headline figure comes with caveats. Chris Hutchins, founder and chief executive of Hutchins Data Strategy Consultants, warned that the attribution may not always reflect reality. He told Moneywise that roles involving repetitive, pattern-based tasks are naturally more exposed to automation, but added that when AI is cited beyond those areas, ‘the underlying cause is likely something other than AI.’

That tension sits at the heart of the current moment. Companies are restructuring, cutting costs and reshaping teams, and AI has become both a genuine tool and, arguably, a convenient explanation. It raises an uncomfortable question: how many of these layoffs are truly driven by technology, and how many are simply being reframed that way?

Big Tech Layoffs and AI Investment Collide

What is clearer is the behaviour of major technology firms. Several industry giants have trimmed their workforces while simultaneously pouring resources into artificial intelligence.

Oracle, for instance, has reduced its workforce by around 21,000 employees over the past year, according to figures cited in external reporting. Google has also continued to cut roles through internal reviews, buyout schemes and restructuring efforts, with estimates suggesting between 1,500 and 3,000 engineering jobs have disappeared in 2026.

The pattern is hard to ignore. Investment in AI infrastructure and talent is rising, while traditional roles, even highly skilled ones, are being pared back. Whether that is direct replacement or broader strategic realignment depends on who you ask.

Workers, meanwhile, are watching this unfold with growing unease. A 2025 Pew Research Center survey found that 52% of employees are worried about AI’s long-term impact on their jobs, while roughly one in three said they feel overwhelmed by the technology. Those sentiments have only intensified as layoff announcements continue to roll in.

Spend a few minutes on forums like Reddit or posts on X, and the mood is unmistakable. Some users describe AI as ‘the new outsourcing,’ others call the situation ‘wild’ and unpredictable, with many questioning whether companies are overstating its capabilities to justify cuts. There is also a quieter thread of acceptance, particularly among tech workers who see automation as inevitable, even if it lands uncomfortably close to home.

That divide between scepticism and resignation is shaping the public conversation as much as the raw data itself.

There is also a practical dimension often overlooked. AI systems still require oversight, training and integration, and in many cases, they augment rather than fully replace human roles. Hutchins’ point lingers here.

If layoffs extend beyond clearly automatable work, then something else is driving decisions, whether that is cost pressure, shifting business priorities or investor expectations.

None of this makes the job cuts any less real for those affected. Nearly 100,000 announced layoffs in a single month is not abstract. It is people, teams, careers abruptly interrupted. And when companies cite AI, fairly or not, it shapes how those losses are understood.

What happens next is less certain. If the current pace continues, 2026 could mark a turning point in how employers structure their workforce around emerging technologies. Or it could become a moment that, in hindsight, overstated AI’s immediate impact while masking more familiar economic forces.

For now, the numbers are climbing, the explanations are multiplying, and the line between technological disruption and corporate strategy is getting harder to see.

Originally published on IBTimes UK