Companies have laid off fewer people this year. Experts say that's about to change.

Most companies that have laid off workers this year have cited cost as a reason for their cuts, but a few are trimming jobs because of artificial intelligence —?and more job-cutting could be ahead.

A new analysis from executive-coaching firm Challenger, Gray & Christmas Inc. found that layoffs nationwide dropped in April, with U.S.-based employers announcing 64,789 job cuts during the month, down 28% from March and 3.3% fewer than April 2023.

For the year, companies have announced 322,043 job cuts, according to the research, down 4.6% from the first four months of 2023.

But in a statement released with the data, Andrew Challenger, senior vice president at the firm, said more layoffs could be in the works later this year.

“The labor market remains tight, but as labor costs continue to rise, companies will be slower to hire, and we expect further cuts will be needed," Challenger said. "This low April figure may be the calm before the storm.”

This year's layoffs have hit some industries more than others. Among them:

• The auto sector saw 14,373 cuts in April based primarily on electric-car manufacturer Tesla Inc.’s announcement it would lay off 10% of its global workforce in 2024. For the year, the auto industry has cut 20,189 jobs, more than double the cuts announced during the same time last year.
• Education, which includes schools and universities, has seen 17,892 job cuts this year, up seven-fold from 2,435 cuts announced during the first four months of 2023. “April is typically the time school districts are hiring and setting budgets for the next fiscal year," Challenger said. "Certainly, there are budgetary constraints, as labor costs rise, but school systems also have a retention and recruitment issue."
• Health-care companies, including hospitals, have cut 17,218 jobs this year. That total, however, is down 41% from the same period in 2023.
• Technology, a sector marked by harsh layoffs last year, has seen 47,436 job cuts so far in 2024, down 58% from the same time last year.

Most job cuts were for traditional reasons, with cost-cutting cited as the top factor among the firms surveyed by Challenger. That was followed by restructuring, which came in second.?

Artificial intelligence was cited as the reason for 800 job cuts in April. That number, while not high in absolute terms, is the second-highest monthly figure recorded by Challenger since the firm began tracking AI-related layoffs in May 2023, when 3,900 cuts were attributed to AI.

Companies said they planned to hire 9,802 workers in April, the lowest total for a single month since April 2013. For the year, companies have announced the lowest total number of expected hires since the first four months of 2016.

Job searches also are taking longer, with the average job-search time lasting about 3.05 months so far in 2024, compared to about 2.71 months during the same time in 2023, according to Challenger's findings.

Meanwhile, the Bureau of Labor Statistics' most-recent data shows the labor market has softened slightly over the last month. Job openings stood at about 8.5 million on the last day of March, down from about 8.8 million in February. Layoffs remained historically low in March, at just 1%, down from 1.1% in February and roughly the same as was seen in 2023.

“For job seekers, hearing that the openings rate remains historically elevated could be encouraging. However, if they’ve been seeking a new role for some time and coming up empty handed, it could be another scenario where the economic data doesn’t resonate with the individual experience,” said Elizabeth Renter, data analyst at NerdWallet, in a LinkedIn post. “The openings rates remain highest across the healthcare and hotel and food services industries in March. Workers are in highest demand here and may have opportunities to upgrade their current roles.?“

Concerns about AI

Despite the relatively stable job market, many workers are worried their jobs will be cut as companies seek to cut costs using AI tools.

According to a recent Gallup poll, 22% of U.S. workers are worried they’ll lose their job to generative AI, up from 15% in 2021.

More than 40% of 3,000 American managers?surveyed by Pollfish Inc. on behalf of Beautiful.ai?said they were hoping to replace employees with cheaper AI tools in 2024, and 45% said they view AI as an opportunity to lower employee salaries because less human-powered work is needed.

Of course, experts warn businesses should tread carefully when mixing AI with human resources —?not just because of potential legal liability, but also because of morale considerations.?

Even managers are not immune to the idea that AI could be used to replace their jobs. The Beautiful.ai research found that 64% of managers think AI’s output and productivity is equal to the level of experienced managers — and 62% worry AI tools will ultimately cost them their jobs.