Layoff plans rose in March from a month earlier as employers leaned on AI, according to a new report from the global outplacement firm Challenger, Gray & Christmas.
US employers announced 60,620 job cuts last month, with planned reductions piling up in the tech sector — primarily at Dell (DELL), Challenger said. That followed February’s slowdown in planned layoffs.
While job cut announcements were down sharply from March 2025, last year’s cuts centered on the Department of Government Efficiency (DOGE) factor.
“Removing the wave of federal layoffs announced in February and March of last year, job cut announcements in 2026 are closely following the pattern of 2025,” Andy Challenger, the firm’s chief revenue officer, said in a statement.
Now, “companies are shifting budgets toward AI investments at the expense of jobs,” Challenger said. “The actual replacing of roles can be seen in technology companies, where AI can replace coding functions. Other industries are testing the limits of this new technology, and while it can’t replace jobs completely, it is costing jobs.”
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AI was the top-cited reason for planned layoffs in March, with 15,341 cuts attributed to the technology. But it’s not the leading factor in real job cuts this year — that would be market and economic conditions, according to Challenger’s data. There’s otherwise little other evidence that AI is widely resulting in headcount reductions yet.
Challenger’s data adds to this week’s batch of mixed information on the state of the labor market, which has been stuck in low hiring, little firing, and payroll growth supported mostly by healthcare. ADP reported Wednesday that private job gains were steady last month, while Labor Department data posted Tuesday showed February’s hiring rate hit its lowest level since early in the pandemic.
The Labor Department’s much-anticipated jobs report, which will include March’s unemployment rate, will be published Friday morning.
Emma Ockerman is a reporter covering the economy and labor for Yahoo Finance. You can reach her at emma.ockerman@yahooinc.com.
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