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Trump is shrinking government payrolls. And another big cut is coming.
 

Federal Government Employment: Data from BLS through August, chart by Mish

Worker Buyouts Kick In

The Wall Street Journal reports Federal-Worker Buyouts Are Kicking In, Darkening the U.S. Employment Picture

Some 100,000 federal workers came off the government’s payroll this week, the latest bit of unwelcome news for the softening U.S. labor market.

The departures coincide with the government shutdown, which could bring another round of cuts.

The trims stem from the Trump administration’s deferred-resignation plan, launched earlier in the year, which allowed staff to leave the government and keep their paychecks and benefits for months. About 154,000 employees took the deal, according to the Office of Personnel Management, and two-thirds were paid through Sept. 30, the end of the fiscal year.

Overall, the administration expects the federal workforce to end the year with hundreds of thousands fewer employees, attributed to a hiring freeze, layoffs and voluntary departures. Trump has also threatened to permanently lay off additional workers in connection with the shutdown, which temporarily furloughs an estimated 750,000 people, according to the nonpartisan Congressional Budget Office.

Federal workers’ job applications on Indeed rose 41.2% from January to September, according to the platform. But Frank Grossman, a Philadelphia-based career coach working with federal workers, said many who took the buyout options haven’t looked for jobs in earnest.

“Reality hasn’t hit for a lot of people yet,” he said. 

The government shutdown could soon darken the job picture even more.  

Furloughed federal workers may show up as unemployed in the part of the jobs report used to calculate the unemployment rate, Sweet said. Any new layoffs tied to the shutdown combined with the workers who took the deferred resignation program could mean “a hideous employment report could be coming,” he said. 

A Hideous Jobs Report When?

The Bureau of Labor Statistics (BLS) the household survey’s reference period is the the 7-day period, Sunday through Saturday, that includes the 12th of the month. The household survey determines the unemployment rate.

The establishment (payroll) survey’s reference period is the pay period for an establishment that includes the 12th of the month. This is the nonfarm payroll report.

For the Job Openings and Labor Turnover Survey (JOLTS), job openings have a reference period of the last business day of the month, whereas hires and separations cover the entire calendar month.

JOLTS will not be impacted because that data lags a month.

So, even if we had a jobs report on Friday, none of those 100,000 would have impacted the reports because everyone was paid for the calendar week that included the 12th. This implies they were employed for the household survey.

Changes Since January 2025

• Federal employment was 3.015 million in January of 2025.
• Excluding postal workers (which were not laid off), employment was 2.410 million.
• As of August, Federal employment was 2.918 million, down 97,000. That’s a decline of 3.2 percent.
• As of August, Federal employment excluding postal was 2.325 million, down 85,000. That’s a decline of 3.5 percent.

If employment drops another ~100,000 then Trump will have cut ~7.7 percent of government workers excluding postal.

Q: Is that a bad thing?
A: If the layoffs were properly targeted, then it’s a very good thing.

Some might suggest it’s a good thing regardless. But there is a difference between turning things over to the private sector responsibly rather than haphazardly.

These reductions should have been in a bill, but Congress is broken.

Will Republicans Cave on Democrat’s Government Shutdown Demands?

I expect the shutdown will end by the end of this month. Republicans will cave and offer the Democrats a deal.

Everyone will brag about the deal, especially Trump.

For discussion, please see How Quickly Will Republicans Cave on Democrat’s Government Shutdown Demands?

Democrats’ Strategy

If Democrats can hang on for the rest of the month, healthcare premium notices will be sent.

Consumers can start shopping for next year’s coverage on November 1. Some ACA participants have already started receiving notifications about next year’s premium increases.

About 24 million people are enrolled in ACA (Obamacare) coverage. Roughly that many people will not be happy with sticker shock.

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