When Starbucks Corp. let go of 900 corporate employees in September, it barely raised eyebrows among economists—after all, the company had already trimmed its workforce earlier that year as part of a broader turnaround effort under new leadership. Target Corp. followed in October with 1,800 job cuts aimed at accelerating its response to a challenging retail climate. Other major companies offered similarly specific justifications: Amazon cited AI-driven efficiency gains for eliminating 14,000 corporate roles; Paramount attributed its 1,000 layoffs to a recent merger; and Molson Coors pointed to shifting consumer tastes as it cut 400 positions.
Individually, each announcement seems like a strategic adjustment. But collectively, some economists are starting to see a troubling pattern.
“You’ve got a substantial number of well-established companies making pretty big headcount reductions,” says Dan North, senior economist at Allianz Trade Americas. “At a certain point, you begin to wonder if these aren’t just isolated incidents.”
According to data from outplacement firm Challenger, Gray & Christmas, U.S. employers announced nearly 950,000 job cuts through the first three quarters of 2025—the highest year-to-date total since 2020, a year marked by the pandemic’s economic shock. That figure doesn’t even include the wave of October layoffs. In fact, excluding 2020, this year’s job cuts through September have already exceeded the full-year totals for every year since the Great Recession ended in 2009. “When something is almost the worst since the Great Recession,” North notes, “that’s not a very encouraging number.”
The public sector has borne the brunt, with nearly 300,000 announced cuts, but tech, retail, and even historically stable sectors like airlines have joined the trend—Southwest Airlines, for instance, enacted its first large-scale layoffs in company history earlier this year.
For much of the post-pandemic period, the U.S. labor market operated in what economists describe as a “low hire, low fire” mode: companies hesitated to fill open roles but also avoided layoffs, wary of repeating the hiring difficulties that plagued them during the 2021–2022 labor shortage. Now, that caution appears to be fading.
“There are plenty of available workers,” says Veronica Clark, an economist at Citigroup. “Businesses probably don’t feel the need to hold on to workers longer than necessary.” North puts it more bluntly: “We’re not just in a low-hire, low-fire environment anymore. We’re firing.”
Several forces are driving this shift. Advances in AI and automation are giving managers confidence they can do more with fewer people—more than 60% of executives in a recent LinkedIn survey said AI would eventually replace some entry-level tasks. At the same time, companies facing higher costs—whether from tariffs, inflation, or slowing demand—are choosing to absorb those expenses by cutting labor rather than raising prices.
Still, most economists aren’t sounding a full alarm. Federal Reserve Chair Jerome Powell described the labor market as undergoing “very gradual cooling—but nothing more than that.” Yet vigilance remains high. Clark says she’d grow concerned if weekly jobless claims consistently rose above 260,000, well above their current range of 220,000 to 240,000. Cory Stahle, a senior economist at Indeed, is watching for deeper layoffs beyond tech—particularly in transportation and retail—“because that’s where you start really getting worried.”
Meanwhile, displaced workers face a tightening safety net. The ratio of job openings to unemployed workers has fallen significantly from its post-pandemic highs, leaving fewer options for those suddenly out of work.
Some companies are turning to temporary staffing as a hedge—demand for short-term labor has ticked up after a multiyear slump, according to Noah Yosif, chief economist at the American Staffing Association. While part of this uptick may reflect seasonal holiday hiring, it also suggests firms are replacing permanent roles with contingent workers.
For workers like John Stigler, a 65-year-old audio-visual technician in the Chicago area, the shift offers little comfort. Laid off in early October after a 10-hour shift—“We have no work,” his manager told him—the union member is hoping to land another job in his specialty before retiring. But he knows others aren’t so fortunate: “I’m much luckier than a lot of my brothers and fellow workers in their 30s and 40s, wondering where their next job is coming from.”