AI adoptions help push monthly industrial job losses to 20-year high

Adoption of artificial intelligence is the goal across many U.S. manufacturing operations, but that piece of digital transformation isn't coming without pain to the human workforce, according to a brand-new report that is gaining wide attention.

Job cuts last month reached 153,074 across industries, mainly due to cost-cutting. But the No. 2 cause was AI adoption, according to the report from outplacement firm Challenger, Gray & Christmas.

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And all factors combined resulted in a 175% increase in layoffs compared to October 2024 and the highest monthly number of job losses since October 2003. Also last month, the total amounted to an 183% increase from the 54,064 job losses announced in September.

AI alone, the study found, has accounted for 48,414 job cuts this year. Cost-cutting was the top reason employers cited for job reductions in October, responsible for 50,437 announced layoffs. 

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“Some industries are correcting after the hiring boom of the pandemic, but this comes as AI adoption, softening consumer and corporate spending, and rising costs drive belt-tightening and hiring freezes,” said Andy Challenger, workplace expert and chief revenue officer for Challenger, Gray & Christmas.

“Those laid off now are finding it harder to quickly secure new roles, which could further loosen the labor market.”

Through October, employers have announced 1.1 million job cuts, an increase of 65% from the same period last year and already 44% more than job losses in all of 2024. Year-to-date job cuts are at the highest level since 2020 when 2.3 million cuts were announced through October.

Not only did individual companies announce large layoff totals in October, but a higher number of companies announced plans for future job cuts.

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Challenger counted nearly 450 individual job cut plans in October, compared to just under 400 in September. March, which had the largest number of job cuts this year primarily due to cuts at the Federal level, saw roughly 350 individual announcements.

Warehousing led all industrial categories in October terminations, announcing 47,878. Technology was second, as companies restructure amid AI integration, slower demand, and efficiency pressures.

Consumer products companies—which would include food and beverage—announced 3,409 job cuts in October, up from 1,983 in September. For the year, the sector has announced 41,033 layoffs, up 21% from the same period in 2024, as companies adjust production and workforce levels amid softening demand and changing consumer preferences, said Challenger.

AI adoption in U.S. manufacturing is growing rapidly, with some estimates indicating that over 52% of manufacturers had adopted AI to some level by mid-2025. 88% of organizations regularly use AI in at least one business function, according to a McKinsey survey from this month. 
 
The swift adoption is largely a result of the labor shortage that manufacturing companies have faced for years. Approximately 2 million jobs could be unfulfilled by the end of the decade, according to data from Deloitte and The Manufacturing Institute. 
 
Many companies began using AI and automation to bridge this gap. Some countries, such as China and Japan, are already running fully automated factories. Some plants in the U.S. aren't far behind, like Tesla's Gigafactories.

See also: Human intelligence plus AI and how supply chains are changing with this collaboration 

DOGE—Donald Trump’s Department of Government Efficiency—and its impact remains the leading reason for job cuts in 2025, cited in 293,753 planned layoffs so far this year. This includes direct reductions to the federal workforce and its contractors. An additional 20,976 cuts have been attributed to downstream DOGE impact, which reflects the loss of federal funding to private and non-profit entities.