Job market reality check: May 2025 Challenger report

Once upon a time, I was a writer for research teams. I took all their math and science and transformed it into articles that a regular person might actually want to read.

It was a lot of fun because (1) hanging out with nerds is my natural habitat, (2) I got to take complex ideas and break them down into digestible bites, and (3) I love data but have laughable quantitative skills.

What does this have to do with the labor market? Turns out that the executive outplacement firm Challenger, Grey, and Christmas puts out a report summarizing the previous month’s job cuts.

I’m thrilled about this. You mean, every month, we get an objective report on how many people are losing their jobs—and it’s reliable enough that economists use it? And I can read it and interpret it for others who care but maybe don’t want to spend their free time parsing data? Don’t mind if I do!

So this post is all about the May 2025 Challenger report: what it says, what it means, and what it means for you.

So how did May look? Pete Campbell can tell us.

This iconic Mad Men moment popped into my head when I read the report.

Through May, employers have announced 696,309 job cuts, an increase of 80% from the 385,859 announced in the first five months of last year. It’s about 65K cuts away from matching the entire year's total for 2024.

This isn't just a statistical blip—it’s reflective of how companies are approaching workforce management right now.

Why is this happening? The Department of Government Efficiency (DOGE) is creating ripple effects throughout the economy. While federal workforce layoffs are the biggest news, this aggressive dismantling of our government is affecting contractors and non-profits as well. In fact, "DOGE Impact" remains the leading reason for job cut announcements in 2025, cited in 284,044 planned layoffs so far this year.

Which industries were hit hardest last month?

Services: Companies that serve other companies, like cleaning and temp work, announced 22,492 job cuts in May. This is the highest monthly total for the industry since May 2020. If this is your wheelhouse, expect stiff competition for roles.

Retail: Economic uncertainty is leading this sector to announce the second highest number of job cuts this year, only trailing behind Government. Retailers shared plans to cut 11,483 job cuts for an annual total of 75,802—a shocking 274% increase over this time last year. This is bad news for anyone hoping to pick up a few shifts to make ends meet.

Technology: Tech companies announced 10,598 job cuts in May, bringing its annual total up to 74,716. This is an increase of 35% over the same period last year. A big bummer for these workers, since tech workers tend to expect high compensation for their unique skills, which can make it hard to find a comparable role elsewhere (ask me how I know).

Non-profits: Reeling from cuts in federal spending, non-profits are eliminating lots of positions. While the total numbers aren’t as shocking as other sectors, the 8,565 job losses announced in May (bringing the total to 14,018 this year) is a 504% increase compared to last year! Non-profits do really important work, so this is bad for job seekers and the people who rely on these organizations for services.

A reason for cautious optimism?

Despite the layoff surge, U.S. employers have announced 79,741 planned hires, up 57% from the 50,833 announced at this point in 2024. However, the context here is that hiring remains historically low compared to pre-pandemic levels.

From the report: "The current 2025 hiring pace is more aligned with 2012 (50,194 YTD) and 2013 (180,012 YTD) than with the rebound years of 2021–2022, suggesting that, while companies are adding workers, they are doing so cautiously."

What this means for you

The good news here is that there are still jobs being posted every day. But here’s what you should do to adapt your job-search strategy:

Prepare for a long timeline: With increased competition and cautious hiring, maintain realistic expectations about timeline. If you’re currently unemployed, make sure you’re getting all the government benefits you’re owed. If you’re thinking about job hopping, find ways to keep growing in your current role while you look for something new.

Focus on essential skills: Companies are prioritizing roles that directly impact their bottom line. About 20,000 job cuts this year were related to those companies using AI. So even if you don’t wanna, it’s probably worth it to learn how to use AI so someone else will hire you.

Network strategically: With fewer opportunities available, personal connections are even more valuable. Focus on rekindling or building relationships with people in stable industries or companies that are actively hiring.

Stay flexible and future-focused: From the report: "We will call this report another indication of stasis in U.S. companies in the face of tariff uncertainty.” This suggests that economic policy uncertainty is causing companies to pause major decisions, which could mean opportunities emerge quickly when, and if, clarity returns.