In October, the United States labor market took a dramatic turn. Announced layoffs surged past 153,000 — the highest total for the month in more than two decades. This growth is perhaps more indicative of a recent reversal as the labor market returns to normality in the wake of the pandemic-fueled expansion. One thing stands out in the recent Challenger, Gray & Christmas report—an alarming trend among our workforce. Disruptive technologies such as artificial intelligence (AI) are challenging employers to rethink their workforce needs.
To that end, the Challenger report continues to be an essential resource for smart investors and policymakers, often pointing to early signs of economic distress. The data revealed that layoffs in the first ten months of 2023 increased by 65% compared to the same period last year. In addition, job cuts are soaring, fuelling all the more panic. This trend faces other economic pressures, like shrinking consumer and corporate demand, rising inflationary costs, and the chronic effect of a record-long government shutdown that began in October.
And certainly, as companies have tried to navigate through these conditions, AI adoption has become one of the leading megatrends driving changes to the workforce. The operational efficiencies gained with the latest AI technologies are appealing to companies, so they are adopting them en masse — causing layoffs of their workforces. In fact, the impacts of this technological disruption are already being felt as seen in the new payroll data just released by ADP.
Fed Chair Jerome Powell has noted the current economic climate, stating, “There’s a possibility that it would make sense to be more cautious.” This sense of impatience underscores the widening worries about the sustainability of our current tight labor market, even as pressures on businesses worsen.
The intersection of these three factors creates a complicated, multifaceted picture as the U.S. economy continues to grapple with the changes brought alongside a pandemic. Financial and layoff scamming data Layoffs have been surging, and traditional economic indicators are increasingly difficult to obtain. This leads numerous observers to ask how these trends will define the future of work in America.
“This is the highest total for October in over 20 years, and the highest total for a single month in the fourth quarter since 2008. Like in 2003, a disruptive technology is changing the landscape.” – Challenger, Gray & Christmas report