U.S. Firms Announce 108,000 January Job Cuts as Hiring Plans Hit Record Low

U.S. companies announced more than 108,000 job cuts in January—the highest start to a year since the depths of the Great Recession—as employers pared payrolls and sharply scaled back hiring plans heading into 2026.

U.S.-based firms said they intended to eliminate 108,435 positions last month, more than double the number announced a year earlier and triple December’s total, outplacement firm Challenger, Gray & Christmas reported Feb. 5. At the same time, companies announced plans for just 5,306 new hires in January, the lowest figure for that month since Challenger began tracking hiring intentions in 2009.

“Generally, we see a high number of job cuts in the first quarter, but this is a high total for January,” Andy Challenger, senior vice president at the firm, said in a statement. “It means most of these plans were set at the end of 2025, signaling employers are less-than-optimistic about the outlook for 2026.”

The wave of cuts marks the worst January for planned layoffs since 2009, when employers announced 241,749 job reductions in the midst of the financial crisis. While the latest figure is far below that peak, the combination of rising layoffs and record-low hiring plans is an early sign that corporate America is bracing for slower growth, even as the official unemployment rate remains relatively low.

Packages, platforms and patients

The damage is heavily concentrated in three sectors: transportation, technology and health care.

Transportation companies led all industries with 31,243 announced cuts, driven largely by UPS. The parcel carrier said in late January it would eliminate up to 30,000 jobs this year as it closes facilities and further reduces its reliance on Amazon, long its biggest customer.

UPS Chief Financial Officer Brian Newman said the restructuring—which includes shutting 24 buildings in the first half of the year—is aimed at creating “a more profitable, agile and differentiated UPS,” with a goal of cutting $3 billion in costs. The company has said most of the reductions will come through attrition and voluntary separation packages for full-time drivers and other workers.

Chief Executive Carol Tomé called 2026 an “inflection point” as UPS continues what executives have described as an “Amazon accelerated glide-down plan,” lowering the volume of Amazon packages it handles in favor of more profitable business. UPS cut about 48,000 positions in 2025 through operational and management reductions.

Technology firms announced 22,291 cuts in January, according to Challenger’s report, with Amazon accounting for the bulk. The e-commerce and cloud computing company has told employees it plans to eliminate about 16,000 roles as it reorganizes and flattens layers of management, on top of roughly 14,000 layoffs it disclosed in October.

Amazon Chief Executive Andy Jassy has said in recent months that artificial intelligence will eventually displace some jobs. But Challenger’s report noted that the latest cuts at the company appear to be driven more by overhiring and management delayering than by new technology.

Hospitals and health product companies also made deep reductions. The health care and health products sector announced 17,107 job cuts last month, the most for the industry since April 2020, when the first wave of the COVID-19 pandemic disrupted elective procedures and forced widespread staff reductions.

“Healthcare providers and hospital systems are grappling with inflation and high labor costs,” Challenger’s report said. “Lower reimbursements from Medicaid and Medicare are also hitting hospital systems. These pressures are leading to job cuts, as well as other cutting measures, such as some pay and benefits.”

Labor economists warn that staffing cuts in hospitals and clinics could lead to longer wait times and reduced services, especially in rural areas and low-income communities where access to care is already strained.

AI is cited—but not the main driver

The January figures also underscore how frequently artificial intelligence is now mentioned in corporate layoff announcements—and how limited its role still appears in numerical terms.

Companies explicitly attributed 7,624 job cuts last month to AI or related automation, about 7% of the total. Over the full year 2025, employers said AI was the reason for 54,836 layoffs, and since 2023 the technology has been cited in nearly 80,000 job-cut announcements, Challenger found.

Chemical manufacturers were among the most visible examples in January. The sector reported 4,701 cuts, largely tied to Dow Inc., which told investors it was restructuring operations and adopting more AI-driven automation.

Even so, the report’s breakdown of reasons suggests that traditional business pressures remain far more significant. Contract losses accounted for 30,784 announced cuts in January, including the fallout from UPS’s changing relationship with Amazon. Another 28,392 job reductions were attributed to market or economic conditions, 20,044 to restructuring, and 12,738 to store, plant or unit closures.

“It’s difficult to say how big an impact AI is having on layoffs specifically,” Challenger said. “We know leaders are talking about AI, many companies want to implement it in operations, and the market appears to be rewarding companies that mention it.”

Some labor experts and economists have raised concerns that companies may be overstating AI’s role in their decisions—a phenomenon sometimes described as “AI-washing”—as they move to trim payrolls in response to slower growth, higher borrowing costs and investor pressure to boost margins. They note that many of the jobs being eliminated today, particularly in management and support roles, are more closely tied to post-pandemic overhiring and broad restructuring than to specific AI systems replacing human tasks.

A regional shock and a cautious Fed

The January cuts were not spread evenly around the country. Georgia recorded the largest number of announced layoffs, with 31,415 positions slated to be eliminated, reflecting UPS’s presence in the Atlanta area and the state’s role as a logistics and distribution hub.

Washington state, home to Amazon’s headquarters and a dense cluster of technology firms, logged 19,526 job cuts. Michigan, with its concentration of automotive and manufacturing industries, saw 19,714. California and New York also recorded thousands of planned reductions, though fewer than some smaller states in this report.

The surge in layoff announcements comes as federal data still show a labor market that, on the surface, appears resilient. The unemployment rate stood at about 4.4% at the end of 2025. Weekly applications for unemployment benefits have edged higher but remain below levels historically associated with recessions, and some of the recent increase has been linked to winter storms and seasonal factors.

At the same time, the Federal Reserve has signaled it is not yet ready to declare victory over inflation. After cutting interest rates three times in late 2025, policymakers left their benchmark rate unchanged at their January meeting, emphasizing caution about further easing.

Fed Governor Lisa Cook said in a recent speech that she views inflation as a greater risk to the economy than labor-market weakness at this point, describing the job market as having cooled from its pandemic-era extremes but remaining “relatively strong.”

That stance leaves companies facing borrowing costs that are lower than the peak of the Fed’s tightening cycle but still high by the standards of the previous decade. Many executives appear to be assuming that rates will stay elevated for longer than previously expected and are acting now to protect profits if growth slows.

Fewer exits, fewer entrances

For workers caught up in the latest round of cuts, the biggest challenge may be not just losing a job, but finding the next one.

Outplacement firms and job market analysts say the time it takes for laid-off employees to land new positions has lengthened compared with a year ago, as companies pull back on hiring and become more selective. The record-low number of planned January hires suggests fewer immediate opportunities for displaced workers, particularly in the same industries and regions where cuts are concentrated.

That dynamic has weakened employees’ bargaining power, reversing some of the leverage they gained during the tight labor markets of 2021 and 2022, when wage growth accelerated and job seekers often had multiple offers.

Unions are also testing how far they can push back against cost-cutting strategies. The International Brotherhood of Teamsters, which represents more than 300,000 UPS workers, has criticized aspects of the company’s restructuring, including the design of some voluntary severance offers, and vowed to press the company over how reductions are carried out.

A warning, not yet a collapse

The January spike does not mean the U.S. is reliving the job losses of 2009. The economy then was in free fall, and workforce reductions ran into the hundreds of thousands month after month. By contrast, many of the current cuts are tied to specific contracts, sectors and multiyear restructuring plans that have been telegraphed for some time.

Still, the latest Challenger report is an early warning that corporate leaders are entering 2026 in a defensive posture. They are slimming down payrolls, delaying new hiring and leaning into narratives about efficiency and automation, even as headline labor statistics lag behind those decisions.

Whether this layoff winter turns into a broader freeze will depend on how growth, inflation and interest rates evolve in the coming months—and on how quickly workers leaving UPS hubs, Amazon offices and hospital wards can find a place in whatever version of the labor market comes next.