Private-sector employers and nonprofits are starting to lay off workers as a result of the Trump administration’s sweeping cuts and funding freezes, unleashing a wave of job losses that economists say could pick up steam in the coming weeks, threatening the broader labor market.
The tally appears to be about several thousand private-sector jobs lost in the past two weeks since federal funding cuts and freezes took hold. More than 7.5 million Americans work in jobs directly connected to the federal government, according to the Brookings Institution, as contractors or grant workers — some of whom are already out of a job. And there are millions more who work in positions indirectly connected to federal funding delays.
So far, the fallout includes rescinded contracting jobs in Fayetteville, North Carolina, and Austin; layoffs at an independent-living facility in West Virginia that relies on federal funding to pay staffers; and furloughs at after-school programs in Maine and community health centers in Virginia facing federal funding delays.
“Having funding yanked so quickly means government contracts are at risk, health research is on hold, and millions of employees are getting conflicting messages about their jobs,” said Harry Holzer, a professor at Georgetown University and former Labor Department chief economist. “We don’t know where this is going to end up, but we can’t dismiss its effects on the economy.”
Still, the labor market remains strong, and economists say it could take weeks or months before government-related job losses show up in national data. At 4. 1 percent, unemployment is low, and there are more open positions than people looking for work. New figures Friday are expected to show that job growth continued in January, with employers adding an estimated 165,000 new positions.
Even so, economists say the new president’s funding cuts, tariff threats and deportations could quickly change the economic picture. The Trump administration has taken dramatic steps to shrink the federal workforce by making it easier to fire employees, putting nearly 10,000 USAID employees on leave and
offering buyouts to millions of federal workers.
The White House has warned that additional public-sector layoffs are “likely” if enough of the 2.3 million-person federal workforce doesn’t leave voluntarily. As of Wednesday evening, some
40,000 federal workers had agreed to resign, though a federal judge on Thursday
paused the deadline for the buyout program. A hearing on the matter is set for Monday.
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