The COVID-19 pandemic caused 209,147 cuts in May, followed by 119,018 job cuts due to market conditions, and 50,172 announced cuts due to demand downturn.
May’s total is 577.8% higher than the 58,577 job cuts announced in the same month last year. It is 59.8% higher than the 248,475 job cuts tracked in January of 2002, the previous record monthly total prior to April 2020.
So far this year, 1,414,828 job cuts have been announced, 389.5% higher than the 289,010 announced in the first five months of 2019, and the highest January-May total on record. It is 31,995 cuts away from the 1,446,823 cuts tracked in all of 2002, the second highest annual total on record. The current year-to-date total is 542,048 cuts away from the 1,956,876 cuts announced in 2001, the highest annual total on record.
“Although we saw a significant drop in May over April, we are still in record territory and the cumulative number of cuts since the pandemic began is staggering,” said Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc.
“As states and cities re-open, we can expect to see these numbers decrease as more people return to work. But many lost jobs will not return soon, if ever,” he added.
Job cuts announced in 2020 are 9.8% higher than the job cuts tracked at the height of the Great Recession. In 2009, Challenger tracked 1,288,030 announced job cuts one year after tracking 1,223,993 cuts.
What Industries Saw the Most Cuts
By far, the majority of cuts came from Entertainment/Leisure companies, including bars, restaurants, hotels, and amusement parks, which announced 163,680 cuts in May, a 15,900% increase over the 1,023 Entertainment/Leisure cuts tracked in the same month last year. So far this year, these companies have announced 578,886 cuts, a 7,063.5% increase over the 8,081 cuts announced in the sector through May 2019.
Retailers have announced the second-highest number of job cuts this year with 151,416, 201.4% higher than the 50,243 cuts announced through the same period last year.
The Services sector, which includes companies that provide catering, linen, marketing, and administrative services, announced 107,366 cuts so far in 2020, 846% higher than the 11,348 cuts announced through the same period in 2019.
The Automotive sector, including makers, suppliers, and dealers, has cut 73,576 jobs in 2020, up 243% from the 21,446 cuts announced through May 2019.
The Media have been hard hit this year after two years of increased job cut announcements. In May, Challenger tracked 8,091 cuts in this sector, the highest monthly total for the sector on record. The year-to-date total of 16,750 has already surpassed last year’s annual total of 10,201 and 2018’s total of 15,474, which was the highest annual total since Challenger tracked 22,346 in 2009. Last month’s total is 39.8% higher than the previous monthly record of 5,787 tracked in March 2009.
WHY ARE COMPANIES CUTTING?
COVID-19 was cited for 984,073 job cuts this year, more than 69.5% of the total announced job cuts this year. It is also the reason given for 32,000 hiring plans in May. COVID-19 has sparked companies to announce 1,154,000 new jobs, primarily in Retail and E-commerce.
“Some of the jobs that were lost share skillsets with these new Retail, Delivery, and E-commerce positions. However, the new grocery store clerk or delivery driver now faces risks that were not part of those jobs’ descriptions prior to the pandemic,” said Challenger.Download Full Report