Payroll Services NAICS 541214

Nov 6, 2025 - US Job Cuts in 2025 Top 1 Million

• About 1.1 million American jobs have been cut so far in 2025, up roughly 65% from the same period last year, according to career services company Challenger, Gray & Christmas. In October alone, employers announced about 153,000 cuts, triple the cuts from September and a 140% increase year over year. The largest reductions came from the federal government (~292,000 cuts), followed by technology (~89,000), retail (~80,000), and non-profits (~17,800). Workforce reductions in technology are being driven largely by AI adoption, accounting for over 10,000 cuts so far this year, and contributing to a 36% increase in sector layoffs compared with 2024. Government spending cuts not only affect federal employees, but Department of Government Efficiency reductions to grants and research continue to ripple into the nonprofit sector. Rising tariffs also remain a significant factor in the ongoing wave of workforce reductions.
• Healthcare industry hiring is propping up the weakening US job market and accounting for about 86% of all monthly job additions, according to the US Labor Department. Of the economy’s 74,000 average new jobs a month in 2005 (down from last year’s 130,000 per month gain), about 64,000 of them are in the healthcare and social assistance sectors, essentially propping up virtually all US job gains. The US economy has 23.5 million health services jobs, compared to 12.7 million in manufacturing and 16.6 million in retail. Healthcare job growth is historically recession-proof given the cost is not typically an optional expense, especially among an aging US population. The more than $900 billion in Medicare cuts in Trump’s 2025 reconciliation bill is of major concern for the industry going forward and could lead to job losses.

• Payroll services industry employment steadily increased for most of 2024 and in the early part of 2025, before flattening out by mid-year. According to the US Bureau of Labor Statistics (BLS), employment was up 1.2% in May 2025 from the previous year. Average wages for nonsupervisory employees have been relatively flat so far in 2025 after rising sharply throughout the previous year, with the latest BLS reports showing an increase of 3.8% in May year over year to an average wage of $34.37 per hour. The increases reflect high-demand in a rapidly transforming and technologically complex industry. More companies are outsourcing their payroll services as tax regulations become too volatile; an increase in gig workers, contractors, and remote workers present unique payroll challenges; and technology advances from increased reliance on cloud computing and AI all contribute to employment and wage growth.
• The line between payroll services and insurance companies is growing fuzzy and the pending $4.1 billion merger between payroll service giants Paychex and Paycor further solidifies the industry trend. At the corporate level, the merger will broaden Paychex’s customer base and allow it to utilize Paycor’s AI technology to become a “one-stop shop” for all corporate HR needs - including selling insurance. Previously, payroll companies had mainly left the selling of insurance (mostly worker’s compensation coverage) to its partner agents, but payroll firms are increasingly removing the middle man and selling policies directly. The announced merger - coming on the heels of ADP’s $2.1 billion purchase of WorkForce Software in 2024 - is cause for concern among insurance industry agents who fear being squeezed out of a lucrative customer base.