30 percent of US corporations planning holiday season layoffs

US private employers cut an estimated 32,000 jobs in November, according to the latest monthly snapshot from human resources firm ADP—an unexpected setback that adds to mounting signs of a cooling labor market heading into the holidays.

At the same time, a survey of 1,000 business leaders indicates that more than 3 in 10 US companies plan to carry out layoffs before the end of the year. Many firms say they are using artificial intelligence to help decide whom to let go, a growing practice that is reshaping white-collar and back-office roles. The same survey suggests 69 percent are deploying AI in layoff decisions, 42 percent will not provide severance to all affected employees, and about 82 percent expect executives to receive bonuses this year.

A wave of year-end layoffs

By several measures, 2025 is on track to be one of the heaviest layoff periods since the 2008–2009 recession. A recent report from a job outplacement firm tallied roughly 1.1 million announced layoffs through the end of October, with additional November figures expected to add to that total. Another industry tracker reports mass layoff notices filed with authorities at the highest level in a decade, calling 2025 “the year of layoffs.”

Sector-by-sector snapshot

ADP’s November figures show the sharpest declines in professional and business services (down roughly 26,000), information (down about 20,000), and financial activities (down about 9,000)—sectors where tasks are increasingly susceptible to automation and AI tools. Manufacturing also fell (down about 18,000), while trade, transportation, and utilities barely grew (up around 1,000), a notable slowdown for a category that typically benefits from year-end seasonal hiring.

Company size matters, too. Small businesses—those with 50 or fewer employees—saw the steepest pullback, with about 120,000 jobs cut. Hiring at large firms only partly offset those losses. Several major employers continue to restructure: one large technology hardware company has outlined plans to reduce 4,000–6,000 roles globally by 2028; a leading parcel carrier has announced tens of thousands of layoffs this year; and a major automaker recently eliminated more than 1,000 positions at a flagship electric vehicle plant. Seasonal hiring is also thinner than usual at key logistics providers.

Why small businesses are getting squeezed

Rising input costs, higher borrowing rates, and uncertainty around tariffs and demand have made smaller firms especially vulnerable. With less capital and thinner margins, many report limited ability to absorb higher prices or pass them on to customers. Some retailers also saw weaker-than-expected results from early holiday events, compounding caution around staffing heading into year-end.

Pay growth stalls as living costs rise

ADP’s analysis indicates pay growth for new hires rose just 1.7 percent year over year. Median hourly pay has been effectively flat at around $18 for well over a year, even as household expenses have climbed. For a full-time worker at that wage, weekly earnings barely cover half of an average US apartment’s monthly rent of roughly $1,631. A Senate analysis estimated that maintaining the same standard of living costs the average household more than $11,000 per year above early-2021 levels.

Holiday spending diverges: debt vs. luxury

Consumer sentiment reflects the squeeze: a broad survey found 85 percent of people plan to spend the same or less than last year during the holidays. Yet online data providers report overall seasonal sales up about 7 percent so far, with total spending estimated at roughly $137 billion. The gap is explained in part by financing: buy-now-pay-later usage is up about 9 percent, and one survey found a third of consumers expect to slip into debt over the holidays, with many leaning on credit cards, savings, or installment plans.

Another factor is polarization at the top: higher outlays by affluent households are lifting headline totals even as most consumers cut back. One bank’s survey suggests Americans plan to spend around $2,800 on average this season—figures that likely skew upward due to high-income households. Reports also highlight strong demand for luxury travel and premium rentals at elite destinations, reflecting a “K-shaped” pattern where spending by the wealthiest offsets softness elsewhere.

AI, automation, and the restructuring cycle

Companies are accelerating the integration of AI to streamline operations, reduce costs, and reshape staffing models—particularly in professional services, finance, IT, and customer operations. While productivity gains can emerge, transitions often involve layoffs before new roles are created at scale. If economic growth slows or profit pressures persist, these tools may enable faster and broader headcount reductions than in past cycles.

Financial markets and the risk of overreach

Rapid investment in AI and related technologies has fueled soaring valuations and high-end real estate activity in tech hubs, even as mid-market housing and household budgets remain under strain. Analysts warn that if earnings and productivity don’t keep pace with expectations, elevated valuations could unwind, adding pressure on corporate budgets and jobs.

What to watch next

• Layoff announcements and WARN filings through the first quarter of 2026, especially in tech, finance, logistics, and autos.
• Small business hiring and credit conditions as a leading indicator of broader labor-market health.
• Wage growth for new hires versus rent and essential costs, a key gauge of real purchasing power.
• Consumer debt levels—especially buy-now-pay-later and revolving credit—as a signal of potential spending pullbacks.
• Corporate use of AI in workforce decisions and the emergence of new roles that may offset reductions.

The bottom line: More than 30 percent of US companies expect to cut staff during the holiday season, marking a break with past reluctance to announce layoffs at year-end. With smaller firms retrenching, sector-specific weakness, and AI-enabled restructuring, the labor market is entering a more challenging phase even as headline holiday spending remains deceptively strong.