The impact of the US government’s efficiency drive is slowly beginning to show up in labor market data.
Federal government employment fell by 10,000 in February, according to data released by the Bureau of Labor Statistics on Friday, a decline from the 9,000 federal jobs added last month as Elon Musk’s Department of Government Efficiency (DOGE) continues efforts to pare back the size of the federal workforce.
In total, government jobs contributed just 11,000 to the total nonfarm payroll gains of 151,000 seen in February.
This is down from the upwardly revised 44,000 government jobs added in January and the roughly 38,000 average monthly gain seen throughout the course of last year.
Friday’s report also comes as other labor market measures point to a slowdown in federal hiring.
On Thursday, job placement firm Challenger, Gray & Christmas showed job cuts soared in February to 172,017, their highest monthly level since July 2020. The firm specifically cited cuts from DOGE.
Separate data from the Department of Labor, also released Thursday, showed 1,510 weekly unemployment claims were filed in the District of Columbia in the week ending March 1. That’s down from the 1,893 reported claims filed in the prior-week period but still significantly elevated compared to data over the past year.
A federal hiring freeze was put in place on Jan. 20, and economists have said DOGE-related job cuts from government employment or layoffs related to canceled government contracts likely won’t fully show up in employment numbers until later this year.
Additionally, about 75,000 federal workers took a buyout offer from the Trump administration, which means they will collect a paycheck through early fall and will be considered “employed” for the purposes of these and other reports until that time.
RSM chief economist Joe Brusuelas told Yahoo Finance on Friday he’s not concerned about the labor market’s future once the DOGE-related layoffs are fully priced into the data.
“We have a very tight labor market,” Brusuelas said. “Labor imported from the external tech sector has slowed basically to zero, so you’re just not going to see a surge in unemployment because federal government hiring slows to zero or cuts.”
In a speech on Friday, Trump said he believes “the labor market is going to be fantastic, but it’s going to have high paying manufacturing jobs as opposed to government jobs.”
“We had too many people in government. You can’t just do that,” he said. “This is for 40 years. This isn’t just now. This built up and got worse and worse, and they just hire more and more people.”
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