New Jersey's labor market is sounding alarms. In just the first ten weeks of 2026, WARN filings reveal that 3,857 workers across the state have been affected by mass layoff notices — an 83% surge compared to the same period in 2025.
The state's official WARN notice archive confirms fresh filings already in 2026: The Fresh Market in Montvale (55 workers), International Real Estate Partners US Corp in New Providence (61 workers), Lifetime Brands in Robbinsville (140 workers), and SFC Global Supply Chain in Robbinsville (170 workers) have all notified the Department of Labor of impending separations.
New Jersey's unemployment rate is now hovering near 5.4% — a full percentage point above the national average — widening what analysts are calling the "Garden State Gap." The layoff wave is not confined to one sector: retail giants like Macy's and Saks & Company, tech and pharma leaders like Verizon and Merck, and logistics operators including Amazon and SFC Global Supply Chain are all contributing to the wave.
Is AI Driving These Decisions?
The honest answer is: increasingly, yes. Industry analysts point to the increasing integration of artificial intelligence and automation in roles related to claims processing and underwriting as a key factor, a trend mirrored in tech and telecom, where companies like Verizon have continued rolling reductions into 2026, citing AI integration and shifting business priorities.
Citibank filed WARN notices in New Jersey affecting 141 employees, with separations running through mid-2026, as part of a broader restructuring and AI automation strategy — part of a 10% global workforce reduction.
Nationally, the picture is stark. Analysts at Challenger, Gray & Christmas estimate that 23% of Q1 2026 layoffs now explicitly cite AI automation or AI-driven restructuring in SEC filings or press releases — up from 14% in Q4 2025. Block CEO Jack Dorsey announced the elimination of 4,000 positions, citing "the growing capability of AI tools to perform a wider range of tasks," in what became the single largest AI-attributed layoff event in tech history.
Yet the picture is nuanced. A recent EY study found that more than two-thirds of CEOs expected to maintain or increase workforce levels in 2026, despite AI investments, with many believing AI will reshape roles rather than eliminate them outright. But a competing reality is documented by ResumeBuilder: companies are making a clear calculation — AI investment is the priority, and employee compensation is where the budget is coming from, with bonuses, raises, equity, benefits, and base pay all being cut simultaneously across industries.
One troubling dynamic is emerging. Companies are eliminating workers who hold institutional knowledge while simultaneously lacking the trained workforce needed to direct, validate, and quality-control the AI systems meant to replace them — creating what researchers call an "expertise vacuum dressed as efficiency."
Workers' Compensation: The Fiscal Reckoning Ahead
The shrinking of New Jersey's workforce carries profound implications for the workers' compensation system. Workers' compensation is funded by employer premiums calculated on payroll. As companies reduce headcount, the premium base contracts — meaning less revenue flowing into the system precisely when displaced, retraining, and economically stressed workers may be filing more claims.
In 2026, the workers' compensation system is evolving quickly — employers face rising medical costs, shifting insurance pricing, new compliance rules, and a major increase in claim complexity, especially involving mental health, remote work, and AI-driven claims decisions.
Workers' compensation insurance rates may rise in 2026 due to medical inflation, rising claim severity, higher wage-replacement payouts, and stricter underwriting guidelines. When these rising costs collide with a shrinking premium base driven by AI-related workforce reductions, the fiscal math becomes uncomfortable for insurers, employers, and state regulators alike.
Mental health claims present a specific concern. Displaced workers experiencing job loss, economic anxiety, and career disruption are statistically more vulnerable to stress-related conditions — many of which, under New Jersey's first responder PTSD legislation and evolving case law, are now compensable. The workers' compensation system may face a wave of stress and mental health claims from a workforce caught in the AI transition, even as premium revenue shrinks.
NCCI, the insurance rating bureau, is actively monitoring emerging issues, including mental injuries, workers' compensation coverage presumptions, and systemic changes to the workers' compensation system. National Council on Compensation Insurance — signaling that the fiscal pressures identified here are already on the industry's radar.
New Jersey's amended WARN Act, which requires 90 days' advance notice for mass layoffs, provides workers with some runway. But the runway is not a lifeline. For the workers' compensation bar, the lesson is clear: the intersection of AI-driven workforce reduction, rising medical costs, and shifting claim profiles is not a future problem. It is arriving now, filing one WARN notice at a time.
Related Articles:
NJ Department of Labor — 2026 WARN Notice Archive: nj.gov/labor/assets/PDFs/WARN/2026_WARN_Notice_Archive.pdf
Jon L. Gelman of Wayne, NJ, is the author of NJ Workers' Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers' Compensation Law (West-Thomson-Reuters).
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© 2026 Jon L Gelman. All rights reserved.
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