U.S. Layoffs Hit Pandemic-Era High as Federal Cuts, Tariffs, and Restructuring Drive Job Losses

Layoffs in the U.S. have surged to levels not seen since the height of the pandemic, according to a new report from outplacement firm Challenger, Gray & Christmas. In the first half of 2025, companies slashed 744,308 jobs, the most since the first six months of 2020, when COVID-19 drove nearly 1.6 million layoffs.

A major driver of this year’s spike is the Department of Government Efficiency (DOGE), spearheaded by Elon Musk. The initiative has accounted for nearly 287,000 job losses, hitting federal agencies like Health and Human Services, Education, and USAID.

“This dramatic rise is largely due to significant reductions at federal agencies headquartered in Washington, D.C.,” the firm noted. Thousands more exited under a deferred resignation program.

Microsoft, despite continued profitability, announced a second round of layoffs, cutting roughly 9,000 employees, or 4% of its workforce. Meanwhile, nonprofits, deeply tied to government funding, announced around 17,000 job cuts, a staggering 407% increase from last year.

Retail and tech sectors have also been affected.

“Retailers are one of the hardest hit business sectors by tariffs, inflation, and uncertainty,” said Andrew Challenger, the firm’s senior vice president. Nearly 80,000 retail jobs have been eliminated this year, up 255% from 2024.

Challenger Gray attributed around 2,000 job losses to rising U.S. tariffs. Despite the wave of layoffs, unemployment remains low at 4.2%. The Department of Labor’s June jobs report, expected Thursday, will provide further insight into hiring trends.