For about a year now, the labor market has existed in a state of eerie calm: Not many people were losing their jobs or quitting, but not many of those seeking work were getting job offers.
The mass layoffs now underway across the federal government, along with its employees who are voluntarily heading for the exits, could disrupt that uneasy equilibrium.
While unemployment is relatively low at 4 percent, those losing their positions could face a difficult time finding work, depending on how well their skills translate to a private sector that does not seem eager to hire.
“Federal workers all across the country are starting to look, and it’s impacting people everywhere,” said Cory Stahle, an economist at the job search platform Indeed. “It’s hard to think this isn’t going to stress test the labor market in the coming months.”
On the eve of the Trump administration, the federal government’s executive branch employed about 2.3 million civilians. It’s not clear how many of those will end up being cut, and how many will get their jobs back after lawsuits over those terminations work through the courts.
But impact of the pace at which government spending is being slashed, along with instructions from the White House budget office for agencies to slice even deeper, could be meaningful.
“The firing on the government side is real,” said Thomas Barkin, president of the Federal Reserve Bank of Richmond, at an event late last month. “It’s happening.”
Gregory Daco, chief U.S. economist at the accounting firm EY-Parthenon, estimates that in the most extreme case, one million jobs could be trimmed overall. That estimate assumes 500,000 government contractors are laid off alongside 250,000 federal workers and another 250,000 in job losses at the state and local government levels. Such a winnowing would exert a cumulative drag on gross domestic product of as much as 1 percent over time, Mr. Daco said.
Other estimates suggest the hit could be more contained. Michael Pugliese, a senior economist at Wells Fargo, said federal layoffs would present “only a small headwind to broader economic growth” in the months ahead.
The impact will depend on how many of those workers are absorbed into other jobs, and how quickly. Their prospects vary widely with their skill sets, industries and willingness to relocate.
Chmura Economics & Analytics, a labor market research firm, analyzed the likely distribution of laid-off probationary workers, who have been targeted first. Their chances tend to be better in larger cities than in rural areas. In the first round of announced terminations, there were 718 open jobs for every recently hired worker laid off in the Baltimore metropolitan area, for example, and only three in Oglala Lakota County, S.D.
Finding an open job with the right skill requirements could make things more challenging. In the Washington metropolitan area in mid-February, there were 11,600 postings for business operations specialists, but for just 106 tax examiners and one agricultural inspector.
Not everybody will have trouble finding a new job. In any market, those pushed out of health care roles — about 16 percent of the federal work force, according to an analysis by the Pew Research Center — are likely to find plenty of options. The same is true of people with advanced technology experience, whom the federal government had been focused on hiring in recent years.
One of those now-unemployed workers is Fardous Sabnur, a data scientist just a few years out of college who joined the Internal Revenue Service last summer. She thought it would be a stable job with benefits that would look good on her résumé. And she felt she could do some good in the world, applying machine learning and artificial intelligence techniques to make filing tax returns easier.
Since being fired a few weeks ago, Ms. Sabnur said, she has been interviewing every day and expects to land at a big company, like an investment bank. Still, the transition out of federal service is bittersweet.
“I have very strong prospects, and it won’t be difficult for me to find something new,” said Ms. Sabnur, who lives in the New York City borough of Queens. “But when I go into these companies, I know that my work won’t have as much value in the society as it did at the I.R.S.”
The future looks cloudier for those whose roles were highly government-specific, and whose fields have been decimated by the Trump administration’s crackdown on federal agencies. That includes the U.S. Agency for International Development.
The United States was the single largest global source of foreign aid, and the cancellation of thousands of contracts has forced mass layoffs among the companies that depended on them, leaving their workers with nowhere to go for work with a similar mission.
Wayan Vota, who was laid off from his U.S.A.I.D.-funded company at the end of January, calls it an “extinction event” for the sector. To help aid workers move forward, he started a Substack newsletter geared toward helping international development professionals retool their résumés and translate their skills for private companies. Many have skills managing complex supply chains in unstable countries, which could be useful for large retailers.
“I think someone who has been getting H.I.V. medicines to rural clinics in Mozambique has all the skills, and then some, to get cereal boxes onto the shelves of Walmart,” said Mr. Vota, 52, who is based in Chapel Hill, N.C.
Even for those who work in less niche fields, like financial or environmental enforcement, the Trump administration’s deregulatory agenda could deflate new job opportunities. Requiring fewer studies under the National Environmental Policy Act or the Toxic Substances Control Act, for example, means less work for the technical consulting firms that conducted them.
Scientists who have lost their jobs also face a double whammy: Academic research institutions also depend heavily on federal grants, which the Trump administration has sought to curtail through cuts to the National Science Foundation and the National Institutes of Health. Universities are already pulling back on admitting new doctoral students.
And while the government employs a lot of lawyers, the legal market is being flooded. Law firms often prize attorneys with government experience, who advise clients on compliance and dealing with federal investigations. But if the new administration dials down on oversight as it has promised, those firms may struggle to keep their existing lawyers busy.
Karen Vladeck, an independent legal recruiter, has recently donated some time to maintain a list of jobs available to lawyers leaving federal service — some involuntarily, and others because they see the writing on the wall.
“We really have had a bubble burst on the federal legal work force,” Ms. Vladeck said. “What people are underestimating is that it’s not just people who have already been let go. There are people looking to leave regardless.”
Job cuts may be particularly difficult for the nearly 30 percent of federal workers who are veterans. They often enjoy preferences in the federal hiring process that may not be available in the private sector.
Ross Dickman, the chief executive of Hire Heroes, an employment nonprofit for veterans, said his staff had seen more unemployed veterans come in looking for help this month than a year ago. The time that veterans spend without jobs has also increased. Some of them had found work in field positions that could be difficult to replace.
“I’m mostly worried about veterans or military spouses who came from career fields in the military that already had transferability challenges,” Mr. Dickman said. “If you were Marine infantry and then worked in the forestry service, there’s not always a ton of open market roles along that career trajectory.”
There is one bright spot for federal employees: State and local governments often need people with similar types of experience. States like Hawaii, Maryland, Virginia and New York have been advertising their available positions. A new platform, Civic Match, has worked with more than 4,000 former federal workers, seeking to hook them up with open roles across 124 cities and 41 states.
But Civic Match’s founder, Caitlin Lewis, said some of those public-sector employers were facing uncertainty about their own budgets, given the unpredictable cost-cutting in Washington.
Eventually, drastic cuts in the federal work force may drag down private-sector employment more broadly. Defunding basic research and development, for example, could slow scientific advances that fuel growth. Cuts to emergency management and disaster response could make it harder for communities to recover from fires and storms.
Tara Sinclair, a professor at George Washington University who previously worked at the Treasury Department, said reducing public services — and jettisoning the highly trained professionals who understand how government works — could lead to a “slow degradation of our productive capacity.”
“It might just be this malaise that builds up over time,” Dr. Sinclair added.
