As federal government jobs continue to be slashed, the long-term effect on the U.S. labor market—and economy—has yet to be determined.
While economists at JPMorgan Chase estimate fewer than 30,000 layoffs as of last week, hundreds of thousands more jobs might be cut as Elon Musk’s Department of Government Efficiency’s “deferred-resignation” program and President Trump’s hiring freeze reduce the federal workforce.
With 75,000 resignations, 200,000 fired probationary employees, and 200,000 in attrition, the upper limit of federal employment might drop by 475,000 jobs, or about 20% of the total, the Wall Street Journal reports. And this is not even counting federal contractors who are also losing work.
This is of particular significance as federal employees tend to earn above-average pay, and those who have lost their jobs will likely spend less, especially on discretionary items such as restaurant meals, streaming services, or a new car. And those who remain may cut back on spending just in case.
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