For about a year, the labor market has been in a creepy, calm state. Many people have not lost or quit their jobs, but many who are looking for jobs have not gotten jobs.
The massive layoffs currently underway across the federal government can disrupt that unsettling balance, along with employees voluntarily heading towards the exit.
The unemployment rate is relatively low at 4.1%, but those who lose their jobs may face difficult times to find work, depending on how well their skills are converted into the private sector, which appears to be less enthusiastic about employment.
“We're starting to see federal workers across the country and it's impacting people everywhere,” said Cory Stahle, economist for job hunting platforms. “It's hard to believe that this will not stress test the labor market in the coming months.”
On the eve of the Trump administration, the federal government's administrative division employed around 2.3 million civilians. It is not clear how many of them will be cut and how many will get their jobs back after working through court after the lawsuit relating to their dismissal.
But the impact of the pace at which government spending is being cut and the instructions from the White House Budget Office to slice deeper could make sense.
“The government's firing is real,” said Federal Reserve Bank of Richmond at an event later last month. “It's happening.”
Gregory Daco, chief economist for the US economy at accounting firm Ey-Parthenon, estimates that in most extreme cases, one million jobs can be trimmed overall. The estimate assumes that 500,000 government contractors have been fired along with 250,000 federal workers and 250,000 job losses at the state and local government levels. Such horrors will exert cumulative drag on up to 1% of gross domestic product over time, Dako said.
Other estimates suggest that hits may be more contained. Wells Fargo senior economist Michael Puglise said the federal layoffs will be “just a slight headwind from wider economic growth” for the coming months.
The impact depends on how many of these workers are absorbed into other jobs and how quickly. Their outlook varies greatly depending on their skill set, industry and willingness to move.
Chmura Economics & Analytics, a labor market research firm, analyzed the possibility of a distribution of laid-back probation workers initially targeted. Their chances tend to be better in larger cities than in rural areas. The first round of the announced ending included 718 open jobs for example for all recently employed workers laid off in the Baltimore metropolitan area, with 318 in Oglala Lakota County, South Dakok.
Finding an open job with the right skill requirements can make things even more difficult. In the Washington metropolitan area in mid-February, business operation experts received 11,600 posts, but only 106 tax examiners and one agricultural inspector.
Not everyone has a hard time finding a new job. In any market, people who have been kicked out of the healthcare role (about 16% of the federal workforce) may find many options, according to an analysis by the Pew Research Center. The same applies to people with advanced technical experience, which the federal government has focused on employment in recent years.
One of the currently unemployed workers is Fardous Sabnur, a data scientist who has only been a few years old, graduated from a university that joined the Internal Revenue Agency last summer. She thought it would be a stable job with the advantages that look good on her resume. And she feels she can do some good things in the world, and applies machine learning and artificial intelligence techniques to make tax returns easier.
Since being fired a few weeks ago, Subnoor said she has interviewed her daily and hopes she will land in a large company, like an investment bank. Still, the transition from federal services is bittersweet.
“I have very strong prospects, and finding something new is not difficult,” said Subnoor, who lives in the New York City Borough in Queens. “But when I go to these companies I know that my work isn't as valuable in society as I did with the IRS.”
The future appears to be cloudy for those whose government is highly specific and their sector has been destroyed by Trump's crackdown on federal agencies. This includes the US International Development Agency.
The United States was the only largest global source of foreign aid, and the cancellation of thousands of contracts forced large layoffs between businesses that rely on them, leaving workers nowhere to handle similar missions.
Wayan Vota, who was fired from a USAID-funded company at the end of January, calls it an “extinction event” for the sector. To help workers move forward, he has launched a substance newsletter to help international development experts go back in their resumes and help them translate the skills of private companies. Many have the skills to manage complex supply chains in unstable countries. This is useful for large retailers.
“I think anyone taking HIV medications in a rural Mozambique clinic has all the skills to get a cereal box on Walmart shelves.”
Even those working in fewer niche areas, such as financial and environmental enforcement, the Trump administration's deregulation agenda could potentially shrink new job opportunities. For example, requiring less research under the National Environmental Policy Act or the Toxic Substances Management Act means that less work is required by the technology consulting firms who have conducted them.
A scientist who has lost his job faces a double wamy. Academic research institutions also rely heavily on federal grants, and the Trump administration has sought to cut through cuts to the National Science Foundation and the National Institutes of Health. The university has already returned to recognizing new doctoral students.
And while the government employs many lawyers, the legal market is flooded. Law firms often praise lawyers with government experience and advise clients on federal investigation compliance and handling. But if they dial down with surveillance as the new administration has promised, those companies may struggle to keep existing lawyers busy.
Independent legal recruiter Karen Vladek recently gave some time to maintain a list of jobs available to lawyers leaving federal government services.
“We've actually exploded bubble bursts into the federal law workforce,” Vladeck said. “What people underestimate is that it's not just people who have already been let go. There are people who are trying to leave regardless.”
For almost 30% of federal workers who are veterans, job cuts can be particularly difficult. They often enjoy a preference for the federal employment process that may not be available in the private sector.
Ross Dickman, chief executive of veteran employment nonprofit Hire Heroes, said his staff saw more unemployed people coming in this month and a year ago. Veterans have also spent more time without work. Some of them have discovered work in field positions that could be difficult to replace.
“I am mostly concerned about veterans and military spouses from the military career field, which already faces relocation possibilities challenges,” Dickman said. “If you're a Marine and then worked for the Forestry Department, there aren't always many open market roles along that career trajectory.”
There is one bright spot for federal employees. State and local governments need people with similar types of experience. States such as Hawaii, Maryland, Virginia and New York advertise available positions. The new platform, Civic Match, is working with more than 4,000 former federal workers, and is trying to connect them in open roles across 124 cities and 41 states.
However, Caitlin Lewis, founder of Civic Match, said some public sector employers are facing uncertainty about their budgets given the unpredictable cost savings in Washington.
Ultimately, dramatic cuts in the federal workforce could potentially reduce private sector employment more widely. For example, basic research and development rebates could scientifically promote fuel growth. Reduced emergency management and disaster response can make it difficult for communities to recover from fires and storms.
Tarasinclair, a professor at George Washington University, previously worked for the Treasury Department, said cutting public services and abandoning highly trained experts who understand how government works could lead to “slow degradation of production capacity.”
“It may be this mal laziness that accumulates over time,” added Dr. Sinclair.
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