Layoffs across the U.S. this year have climbed to their highest level since the pandemic slammed the economy in 2020, new labor data shows.
In the first half of 2025, companies announced 744,308 job cuts nationwide, the highest tally since the first six months of 2020, when employers cut nearly 1.6 million jobs in response to COVID-related disruptions, according to outplacement firm Challenger, Gray & Christmas.
Federal agencies have been particularly hard hit this year amid a push by Elon Musk’s Department of Government Efficiency to slash costs. Other sectors shedding a large number of workers include retail, technology, media and non-profit organizations.
Microsoft on Wednesday announced it would cut just under 4% of its workforce, or roughly 9,000 employees, in what is a second major round of layoffs this year for the profitable tech giant.
While the economy remains solid by most measures, economists warn that growth could cool in the coming months as the effects of the Trump administration’s tariff policies take hold.
DOGE effect
Challenger, Gray & Christmas point to several reasons layoffs are on the rise. The leading factor is DOGE, which the firm said has accounted for nearly 287,000 cuts so far this year.
Firings by the task force led to a spike in federal worker cuts earlier this year at the Department of Health and Human Services, Department of Education, USAID and other agencies. Thousands also departed through a deferred resignation program.
States in the East and Southeast have seen the biggest jump in layoffs, with a more than 220% jump from a year ago, according to Challenger, Gray & Christmas.
“This dramatic rise is largely due to significant reductions at federal agencies headquartered in Washington, D.C.,” the firm said in its report.
DOGE’s activities also affected employees in other states and industries that benefit from government funding, including nonprofit groups. So far this year, nonprofit organizations have announced roughly 17,000 job cuts, up 407% from the same period last year, the new data shows.
Tariff hit
An economic slowdown and rocky financial markets has led companies to shed more than 154,000 jobs this year, according to Challenger, Gray & Christmas. Retailers have eliminated nearly 80,000 jobs this year, up 255% from the first half of 2024.
“Retailers are one of the hardest hit business sectors by tariffs, inflation and uncertainty,” Andrew Challenger, senior vice president of Challenger, Gray & Christmas, said in a statement. “If consumer spending continues to fall, it could mean more job losses in this industry.”
Challenger Gray directly attributes 2,000 layoffs so far this year to stepped-up U.S. tariffs on foreign imports. Other factors the contributing to the wave of layoffs include store closings and company restructuring efforts. Del Monte, At Home and 23andMe are among the companies that have filed for bankruptcy this year.
Although layoffs have jumped, the nation’s unemployment rate remains historically low at 4.2% and hiring has remained steady. The Department of Labor is set to release its June employment report on Thursday, with economists forecasting payroll gains of roughly 115,000 in May, according to financial data provider FactSet.
