According to economists, purges of federal workers in the Trump administration could ultimately fall into the biggest job in US history.
The White House, with the help of Elon Musk’s so-called government efficiency office, fired or provided the acquisition to federal workers, the nation’s largest employer.
The exact scale of the job cut is still unknown, but evidence suggests that it is at least tens of thousands so far, the economist said.
The Trump administration has directed federal agencies to deny “probation” employees. Probation workers are more generous employers who have only been in the federal government for a year or two and have not yet received full civil service protection.
As of May 2024 there were approximately 220,000 federal employees with tenure of less than a year, according to the latest data from the U.S. Office of Personnel Management.
Additionally, more than 75,000 federal workers have accepted offers to buy, according to Trump administration officials. They agreed to resign, but will be paid until September.
Callie Cox, chief market strategist at Ritholtz Wealth Management, said the total of these two groups (nearly 300,000 workers) is “the largest employment cut in American history (a mile).”
This total does not include others who may be in the chopping block, such as contractors working for the US International Development Agency. Jesse Rothstein, a professor of public policy at the University of California, Berkeley, is technically a new role probation, so career civil servants who have been promoted over the past year are at risk of losing their jobs. Thursday’s podcast.
Employment cuts come from across the government, including the Internal Revenue Service, the National Park Service, the Consumer Financial Protection Agency, the Department of Agriculture, Education, Energy, Health and Human Services, Homeland Security and Veteran Affairs. Associated Press.
“We may soon find a tough way for people to drive the US economy,” Cox wrote.
Assessment of the scale of federal employment cuts
According to the economists, I don’t think the final number cuts are as high as 300,000.
For example, there may be some crossovers. Probation workers who would have been fired may have accepted the acquisition. Also, in some cases, the Trump administration has sought to hire fired backworkers.
Wednesday’s research notes from investment bank Piper Sandler show that public disclosures show more than 26,000 federal workers have already been fired.
For example, there are roughly the same number of workers who lost their jobs when the Lehman Brothers collapsed during the 2008 financial crisis.
But Capital Economics North American economist Thomas Ryan estimates that between 100,000 and 200,000 federal staff have already been let go.
It would help IBM purge 60,000 workers in 1993, considered to be the largest corporate layoff in US history. Among other notable companies cuts, Citigroup and Sears, Lowback & Co. reduced employment by approximately 50,000 people significantly in 2008 and 1993, respectively.
“It’s certainly true that if all the historic 200,000 or more probation workers are fired, it’s going to be historic,” says Susan Houseman, a senior economist at the nonpartisan We Upjohn Institute for Employment Research, electronically. I’m writing it by email.
Even during previous federal layoffs, the scale of potential cuts appears unprecedented, experts said.
For example, the US Army eliminated 50,000 jobs in September 2011 when President Barack Obama pulled out troops from Afghanistan and Iraq. The U.S. Air Force announced plans to cut the number of heads in 2005 by 40,000, the company said.
The Bureau of Labor Statistics tracked data on federal public layoffs from 1995 to 2003. During that period, the massive layoffs were affected by around 9,000 federal workers per year to 23,000 per year.
“We’re excited to see the world of exploring the world,” said Mark Zandy, chief economist at Moody’s.
The White House did not comment on the size of the particular cut.
“President Trump and his administration are submitting American missions to eliminate wasted spending and make federal agencies more efficient, including non-mission-critical probation employees. “This is part of President Trump’s drastic efforts to save taxpayers’ dollars, reduce wasteful spending, and recover a broken economy.”
Potential economic impacts
Unemployment can be painful for family finances.
Affected workers who are unable to find a new job right away may be forced to achieve their goals without a normal income. Unemployment benefits may provide temporary suspensions for eligible workers, but labor sector data shows that on average, only about a third of previous wages can be replaced.
According to a 2016 research paper by Henry Farber, professor emeritus of economics at Princeton University who studied the data, workers struggle with unemployment because they struggle to find a new full-time job and then earn less money. Most of them are affected over the long term. From 1981 to 2015.
“We’ve seen a lot of work in the US and the company’s office of Labor Statistics,” said Erica Groshen, Senior Economic Advisor at Cornell University and a former commissioner of the US Bureau of Labor Statistics. .
“The economic impact of layoffs is like the domino effect that spreads to the local economy for businesses that seem to have absolutely no connection to the federal government,” said Ernie Tedesci, director of economics at Yale University Budget Lab. It’s there.
He said laidback workers could potentially be less expensive at businesses such as local coffee shops, restaurants and daycare facilities.
There are also psychological factors in the massive layoffs, the economist said. Other federal workers who are afraid of their jobs may pull back their spending and delay buying big debts. Companies with ties to the federal government or federal workforce may suspend employment and investment due to uncertainty.
Washington, D.C., for example, is expected to suffer a “meaning” increase in unemployment rates that push the capital into a “moderate recession.”
Kamins and Begley estimates that nearly 100,000 federal positions will be removed or moved from Washington over the next few years. “Floods” for job seekers, they said, limit the private sector’s ability to absorb into the labor pool.
Maryland and Virginia economies don’t suffer to the same extent, but are “substantially” hurt by their government’s exposure to employment, Cummins and Begley writes.
According to Piper Sandler, layoffs are unlikely to appear in federal data in another month, and are unlikely to appear until September for those in charge of retirement agreements. Unemployment claims in Washington, DC for the week ended February 8th increased 36% from the previous week.
“It’s not a recession.”
But economists don’t think job cuts will have a major impact on the US economy as a whole.
If around 200,000 probation workers lose their jobs, that’s about a tenth of the percentage of US gross domestic product per year, according to Tedesci, who served as the chief economist for White House economic advisors during the Biden administration. He said he would shave.
“This isn’t a recession in itself,” he said.
Capital Economics’ Ryan said the scope of federal layoffs is relatively small when considered in the context of the US labor market, which added about 1.5 million jobs in 2024. It is close to full employment that “makes pain shorter.”
Capital economics has not downgraded economic growth forecasts due to federal layoffs, Ryan said. That assessment includes potential ripple effects felt indirectly through the economy.
“The addition of knock-on effects won’t put the US in a recession,” Tedeski said. “Let’s be realistic here.”
But massive layoffs add to the pressure already placed on the economy by other Trump administration policies, such as tariffs and massive deportation, economists said.
“This was a healthy economy coming in 2025,” Tedeski said. “And all of a sudden we have a lot of serious potential headwinds that are stacked up, and this is one of them.”