The $40 billion secret: What workforce insights reveal about Fortune 500 companies

Fortune 500 companies represent two thirds of the United States’ GDP. In 2024, they generated $18.8 trillion in revenues and $1.7 trillion in profits. These companies have a combined market value of $43 trillion and employ 31 million people worldwide, so their impact on the US economy is significant.

Annual reports filed by most of these companies during the first quarter of 2025 provides insight into how corporate workforces are changing. Our analysis of these reports reveals that Fortune 500 companies incurred almost $45 billion in severance charges in 2024, despite the aggregate workforce appearing largely unchanged.

But to understand what’s really going on, you need to get beyond a high-level aggregate view of the data. By analyzing case-by-case over time, we see a pattern of constant change as these companies continually realign and rebalance their workforces.

Workforce stability is an illusion

At first glance, the number of people employed by Fortune 500 appears remarkably stable. Between 2022 and 2024, the aggregate number of people employed by these corporations remained virtually unchanged.

But this observed stability is an illusion. Since 2022, more than 1.6 million jobs have been added by companies expanding their workforces, but this number is negatively matched by companies cutting their workforce. Over the same time period, Fortune 500 companies reported 1.58 million fewer employees.

So, while the majority of companies increased their workforce in 2023 and 2024, the proportion of these increases is declining: 58% in 2023 and 51% in 2024. The scale of these increases has also fallen from 6.9% in 2023 to 5.7% in 2024.

To add to this, the proportion of companies reporting workforce reductions increased from 35% in 2023 to 40% in 2024. In both years, the scale of these reductions was more than 5%.

The hidden costs of workforce restructuring

As $45 billion in severance charges last year proves, the cost of this workforce realignment is staggering. And this figure has increased year-on-year as an increasing proportion of companies report such severance charges due to restructuring.

To add to this, severance is not limited to companies making workforce cuts. $13 billion of the 2024 total was incurred by companies recording overall headcount increases, indicating widespread “rebalancing” activity to manage the workforce cost base.

But the costs of transformation extend beyond severance. Our modeling based on Bloomberg’s assumptions published in The True Cost of Layoffs reveals $1.27 spent for every $1.00 of cost saving when lost productivity and inflated attrition are taken into account.

This shows that the conventional approach to transformation has a poor return on investment and Fortune 500 companies and others should consider a different approach that focuses on rebalancing work around people, rather than removing people.

What’s the problem if productivity is improving?

Despite these shocking figures, productivity measured through revenue per employee is trending upwards. There’s been an increase in total revenue across the Fortune 500 without a corresponding increase in employee numbers. But again, the aggregate-level data doesn’t tell the full story.

Looking at trends over time, we see a close, dynamic relationship between the human workforce and top-line financial performance, suggesting the automation revolution is yet to have widespread impact:

• Companies recording year-on-year headcount increases delivered 14% revenue growth over the last two years ($649 billion) with 12% more employees.
• Companies recording year-on-year headcount decreases cut their workforces by 10% and report 2024 revenues 4% lower than 2022.

When companies start cutting, they find it hard to get off the transformation treadmill. 50% of those making cuts in 2023 made further cuts in 2024. Half the Fortune 500 recorded workforce decreases in one of the last two years.

The takeaway for corporate leaders

The more we analyze these trends, one thing becomes clear: behind the aggregate stability of Fortune 500 employment data is a complex story of organizational transformations incurring huge financial costs, as leaders seek to balance their workforces against business performance outcomes.

Corporate leaders should question the long-term value of aggressive workforce reductions and acknowledge the huge costs involved. While Wall Street may temporarily reward improved efficiency metrics, our data indicates that sustainable revenue growth continues to require ongoing human capital investments.

Organizations with the capability to forecast, track, and adaptively redeploy human capital investments in response to changing business priorities will avoid the peril of the cost-out transformation treadmill and establish a critical foundation for sustainable performance.

Strategic workforce planning

Use Orgvue to streamline your organization.