Layoffs in Maryland are up nearly 30%, with about 2,000 more jobs being cut than this time last year. Nationally, this year has seen over one million layoffs — the highest amount for this time of year since the Covid-19 pandemic and the Great Recession.
This year, artificial intelligence is among the top ten reasons given by employers for job cuts, alongside cost-cutting, federal cuts and economic conditions, according to the October 2025 Challenger Report, a monthly job cut announcement report published by Challenger, Gray and Christmas Inc., a business consulting firm.
“We have to treat this as a transition period,” said Balaji Padmanabhan, the director of the Center for Artificial Intelligence in Business at the Robert H. Smith School of Business at the University of Maryland. “We are figuring out what AI can do.”
Looking at the first three quarters of the year, job cuts are up 55% from 2024.
“There are so many things going on simultaneously, and that’s what’s making it harder to tease out purely the effects of AI,” Padmanabhan said.
Some of the big factors in this year’s job cuts may be more complicated. Technology companies, for example, have been overhiring in the last five years in a rush for talent. Now, they’re realizing there’s no longer a need for those extra employees, Padmanabhan said. As a whole, businesses are facing economic uncertainty and don’t know what the future will cost under the looming fear of inflation.
Earlier this year saw over 300,000 federal job cuts attributed to the Department of Government Efficiency (DOGE), totalling 28% of the total cuts so far. Looking at the beginning of summer onwards, there were few to no cuts still attributed to DOGE. In October, AI was the second most cited reason for cuts, according to the Challenger Report.
AI excels in text, data, summarizing and producing reports. It’s good in information jobs, data analysts and customer service. A worker could use AI to do their tasks, and if their job consists only of tasks that AI can do, “then that becomes problematic,” Padmanabhan said.
At the moment, companies are seeing what jobs they can replace, but the type of jobs that people are doing will change to meet this.
“As companies figure out that AI can do new things, they’re going to have to hire people,” Padmanabhan said. “I think we will see a new type of job that starts getting created.”
For the month of October, AI was the second most common reason given for job cuts, right behind cost-cutting.
The Work Adjustment and Retaining Notification Act (WARN) requires employers to notify the Maryland Department of Labor of layoffs and closures. Companies mentioned in the published list of layoffs in Maryland include DAI Global, a development company, Broadway Services, a contract service company and Catalent, a gene therapy company, collectively totalling over 2,000 of the state’s reported layoffs.
Though many of Maryland’s layoffs were likely from federal cuts, Padmanabhan said.
According to the 2025 Challenger Report, end-of-year layoffs were a dying practice with the rise of social media, where employees could publicly air grievances. As a result, it’s unusual to see this many layoffs so close to the holiday season.
This is the highest number of job cuts for the month of October since 2003, when the job market suffered the cost of the burst of the dot-com bubble.
The ‘dot-com bubble’ refers to the rise of the internet from the 90s to 2000s. Before the burst, investors were putting money into tech-savvy businesses, until those companies went bankrupt and hundreds of thousands of employees were laid off.
“It was a very fundamental technology shift that, down the road, resulted in more jobs,” Padmanabhan said. Short-term, the internet euphoria led to issues for many companies. He believes AI is different — because AI has a fundamental value.
Though there is still a chance of an ‘AI bubble.’ Companies are putting high value into their AI ventures and data centers, and if these ventures don’t start yielding a profit, stock prices could go down and that could have its effect on the market, and on people’s wallets.
To prepare for the shock at the end of this AI transition period, “We all have to do a better job at preparing the workforce,” Padmanabhan said. “The worst thing we can have right now, from an employee perspective, is to have them do the same job they were doing before, with the risk of AI doing more.”
The future of AI in the workforce is “a ticking time bomb of sorts,” for non-AI users. But, if employees are trained to use it, Padmanabhan believes “people are amazingly creative. They’ll figure out new things to do.”