The new era of corporate cost-cutting is hitting American workers with full force.
Big companies from Amazon.com to UPS are slashing jobs, looking to shrink their head counts after years of breakneck growth. Companies generously expanded their workforces during the pandemic years of 2020 and 2021 and doled out hefty raises, worried that moving too slowly might leave them with a shortage of skilled workers.
Now, some companies say their hiring sprees went too far. Their biggest concerns today are bloat and runaway expenses.
“A lot of these companies found that they are too big,” said Guy Berger, a senior fellow at the think tank Burning Glass Institute.
Amazon said Wednesday that it would lay off an additional 16,000 corporate employees after laying off 14,000 workers in the fall. The combined cuts amount to around 10% of Amazon’s corporate workforce. On Tuesday, UPS said it expected to slash 30,000 jobs this year, on top of 48,000 job cuts last year, saying the company needed to “right-size.” Also on Tuesday, social-media company Pinterest said it planned to shrink its workforce by up to 15%.
For months, corporate executives and labor economists have theorized about whether—and when—advances in artificial intelligence will lead to widespread layoffs. But that shoe has yet to meaningfully drop.
For the moment at least, the layoff story is centered on bloat. The sectors that recorded some of the top hiring surges in 2020 and 2021—tech and logistics—are now seeing the most layoffs. U.S.-based employers announced 1.2 million job cuts in 2025, the highest annual figure since 2020, according to outplacement firm Challenger, Gray & Christmas. The tech sector led all private-sector industries with 154,445 job cuts, followed by warehousing with 95,317.
“This is still about the overhiring or hiring boom that happened in that immediate postpandemic era,” said Laura Ullrich, director of economic research at jobs-platform Indeed.
CEOs insist behind the scenes that their companies are still too large and too bloated. In announcing staff cuts, many executives have said the layoffs would speed up operations and give people more autonomy. Beth Galetti, a senior vice president of people experience and technology at Amazon, wrote in a note to staff Wednesday that Amazon’s cuts were aimed at trimming management layers and removing bureaucracy. “Some of you might ask if this is the beginning of a new rhythm—where we announce broad reductions every few months,” Galetti wrote. “That’s not our plan.”
Starbucks Chief Executive Brian Niccol said the company likely would be hiring fewer people in its corporate-support centers, with more job growth showing up in the chain’s cafes. Niccol said in an interview Wednesday that the company needs to examine where it can get more efficient through technology when it comes to its staffing. Starbucks has held two rounds of layoffs since Niccol joined as CEO in September 2024.
By many measures, the U.S. economy still boasts a relatively healthy job market. The layoffs are heavily concentrated among a small number of big companies, and overall job losses are low by historical standards. The unemployment rate, while up from 2024, is well below prepandemic levels. As prominent employers such as Amazon now cut roles, many companies in other industries continue to hold on to their staffers.
Hiring has nevertheless slowed to a crawl. People who lose their job today often have a hard time finding a new one, and they stay out of work for longer. In December, the average length of unemployment was 24.4 weeks, according to Labor Department data. In December 2022, the figure was 19.4 weeks.
High interest rates and tariff uncertainty are weighing on the jobs picture, leading more companies to hit the pause button on hiring, said Lisa Simon, chief economist at workforce data company Revelio Labs.
Firms also are investing billions in AI, shifting expenses to technology and leaving less for labor.
Pinterest on Tuesday said it would cut up to 15% of its workforce, or roughly 700 jobs, in an effort to shift its resources to AI-focused roles and products. The company said in a filing that it was “prioritizing AI‑powered products and capabilities,” and would be speeding up a transformation of its sales approach.
Some economists and CEOs say that the U.S. economy is positioned only at the beginning of a wave of corporate job cuts, as rising AI-adoption makes more workers expendable. Economists at Goldman Sachs estimate that AI was responsible for 5,000 to 10,000 monthly net job losses in the industries most exposed to it in 2025. They expect the figure to rise to 20,000 a month in 2026. Over time, AI could displace 6% to 7% of all current jobs, the bank’s economists wrote in a recent note, although AI likely will create new jobs by boosting economic growth.
Verizon Communications CEO Dan Schulman, on a panel at the World Economic Forum in Davos, Switzerland, last week, said the job market was shifting so rapidly that more turmoil was all but inevitable. The company in November said it planned to cut more than 13,000 jobs, its largest reduction ever.
“If you say to your employees there’s not going to be any job disruption, I think you lose all credibility,” Schulman said on the panel. “All of them get it that there’s going to be. It’s really early on—and a year from now, it’s going to be radically different.”
He added: “Machines can do most anything we do better than we can do it.”
Still, at the moment, companies are pointing fingers at years of robust hiring. Logistics firms expanded heavily during the pandemic as Americans spent more money ordering anything from stationary bikes to restaurant meals online. But recently, tariff uncertainty and trade tensions have weighed on the sector, economists say, while automation means fewer workers are needed.
Nike this week said it would cut 775 people, primarily at distribution centers across Tennessee and Mississippi, as the sneaker company rolls out more advanced automation and looks to streamline its operations. The reductions represent about 1% of Nike’s overall workforce and are part of a broader turnaround effort to help it return to long-term, profitable growth, the company said.
“I do think we’re going to find more streamlining of large organizations for the foreseeable future, and that will create different jobs,” said Andy Decker, CEO of the recruiting firm Goodwin Recruiting, which works with employers across different industries.
When Decker and his colleagues talk with people looking for work, they have emphasized that they might need to pursue different roles in the future.
“In this current market, people need to realize what they’ve done might not be what they’re going to be doing forward,” he said. “They’ve got to constantly be evolving.”
Write to Konrad Putzier at konrad.putzier@wsj.com and Chip Cutter at chip.cutter@wsj.com