Urban Wire The Implications of Shrinking the Federal Workforce by DOGE’s Recommended 75 Percent
Jonathan Schwabish
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photo of US Postal Delivery on city street

President-elect Donald Trump tasked Elon Musk and Vivek Ramaswamy with running the new nongovernmental Department of Government Efficiency (DOGE) to “dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies,” or, in their own words, “cut the federal government down to size.” How DOGE plans to cut $2 trillion from the $6.1 trillion federal budget and reduce the federal workforce by 75 percent remains to be seen.

While many have documented how cutting one-third of the federal budget could result in drastic service cuts across the nation, fewer have examined how reducing the federal workforce by three-quarters would affect communities across the country. Here, we summarize a simple set of calculations that explore how such reductions would affect metropolitan areas around the country.

According to the Congressional Budget Office, the US federal government employed around 5.1 million workers in 2022, the most recent comprehensive data available, similar to the number employed in 1992. Of those 5.1 million federal workers, 2.3 million are civilian, 2.1 million are uniformed military personnel, and roughly 700,000 are “government enterprise workers,” most of whom are employed by the US Postal Service.

Contrary to expectations, most civilian federal workers are not in the Washington, DC, area, according to Office of Personnel Management data. In fact, the nearly 315,000 civilian federal workers in the DC area account for just 15 percent of the entire civilian federal workforce and 9 percent of DC’s local workforce.

Cuts to Federal Workers Would Affect Unemployment Throughout the Country, Not Only in Washington, DC

 


Sources: Author’s calculations using matched US Bureau of Labor Statistics and Office of Personnel Management data.
 

For our analysis, we calculate the unemployment rate in each metro area around the country and “fire” 75 percent of the civilian federal workforce, adding them to a new estimate of the unemployment rate. This blanket approach doesn’t consider how DOGE might weigh the necessity of certain positions, like security officers at federal prisons, border patrol agents, or civilian military personnel at military bases. Nor does it consider possible labor market responses—like unemployed workers finding new jobs in other sectors, moving from the area, or leaving the labor force. But the immediate, short-run result of 75 percent of federal workers eliminated remains the same.

From the analysis, we immediately see three clear implications:

  1. The most-affected areas (in terms of unemployment) tend to be small and home to military installations or bases. Fort Leonard Wood, Missouri, home to a major US Army training base, has a total labor force of almost 15,000 people, of whom 3,000 are federal civilian employees. (This count excludes uniformed military personnel). Cutting the civilian federal workforce by 75 percent would increase the unemployment rate there by 15 percentage points.
  2. The smallest metro areas would see large changes in their labor markets, double that of large metros. In the 10 smallest labor force areas in the country—the largest of which has about 7,200 workers—unemployment rates could rise by more than 2.5 percentage points. The Zapata, Texas, metro area, which houses the US Customs and Border Protection office, and Ketchikan, Alaska, which includes the largest national forest in the US, would see their unemployment rates rise by 2.5 percentage points and 2.2 percent percentage points. Among the 50 smallest areas, 4 would see unemployment rates rise to more than 10 percent. None of the 50 largest areas would see unemployment rates exceed 10 percent.
  3. Aside from Washington, DC, unemployment rates in large metro areas would increase by 1 percent or less. Of the 10 largest labor markets in the country, Philadelphia and Atlanta would see the largest increases in unemployment rates, at 0.9 and 1.0 percentage points, but others, like the New York, Chicago, and Houston metro areas, would see more-modest increases of 0.5 percent.

Projected Increases in Local Unemployment Rates after a Proposed 75 Percent Reduction in the Federal Workforce

Graphic of Projected Increases in Local Unemployment Rates after a Proposed 75 Percent Reduction in the Federal Workforce


Source: Author’s calculations using matched March 2024 US Bureau of Labor Statistics and March 2024 US Office of Personnel Management data.
Note: Data shown by Core Based Statistical Area.
 

DOGE’s early promises of large cuts to the civilian federal workforce would have wide-ranging effects, with smaller areas and areas with military bases disproportionately affected. Our analysis shows that cutting the workforce to this extent won’t just affect Washington, DC—it will spill over every region and every state in the country.

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Research and Evidence Work, Education, and Labor
Tags Employment Federal budget and economy Job markets and labor force Labor force Macroeconomy
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