Likely bringing federal job losses to 200,000+ since January. Excluding federal & state, nonfarm payrolls haven’t been all that bad.
By Wolf Richter for WOLF STREET.
About 100,000 civilian employees of the federal government, of the 154,000 who took the voluntary “deferred resignation” deal in the spring under the Trump administration’s “Fork in the Road” buyout program, came off the government payrolls on September 30, the end of the fiscal year.
As part of their deal, they no longer worked for the government as of their resignation date, but would remain on the payroll and collect full pay and benefits through September 30.
These voluntary departures were in addition to waves of layoffs, sackings, and early retirements across agencies.
The Bureau of Labor Statistics has already accounted for a net reduction of 97,000 federal jobs from January through August (separations of all kinds minus new hires), as per the most recently released jobs report in early September.
But those 100,000 people under the “Fork in the Road” program were not included in the decline of 97,000 federal government jobs because they were still on the government payroll through September 30.
The reference period in the BLS establishment survey is the pay period that includes the 12th of the month. So the August nonfarm payrolls report, released in early September, which showed 15,000 job losses at the federal government that month, was for the payroll that included August 12. The government pays every two weeks. The pay period that included August 12 ended August 23.
The missed nonfarm jobs report on Friday, October 3, would not yet have captured those 100,000 whose last day on the payroll was September 30 because the reference period of the government payroll that included September 12 ended September 20.
But the next nonfarm payrolls report, to be released on November 7, Congress willing, would include those 100,000.
Every month since January, the federal government has had a net decline in employment. It’s reasonable to assume that in September it also had a net decline in employment.
The 100,000 “Fork in the Road” people would come on top of the net decline in September plus whatever net decline in October. So the total net decline of those two months could be 110,000 or more, sketched into this chart with a blue line.
The total decline since January would then be over 200,000 jobs – and that makes a big dent in the growth of overall nonfarm payrolls.
State governments have also been shedding jobs for months. Federal and state governments combined shed 28,000 jobs in August.
But employers excluding federal and state governments created 50,000 jobs in August. And the three-month average was 48,000 jobs. That wasn’t exactly hot, but it wasn’t that bad either.
The share of federal government jobs, with the assumptions above, would plunge to 1.76% of total nonfarm payrolls, by far the lowest share in the data going back to 1939.
But ICE is hiring…
Immigration and Customs Enforcement has been on an aggressive push to hire people for all kinds of roles, such as “deportation officers.” To open the jobs to a broader field of candidates, including retired law enforcement officers, ICE removed the age limit. To make the jobs more appealing, it threw in signing bonuses and other benefits.
In a press release on September 16, ICE said that it had already received over 150,000 applications and had already extended over 18,000 tentative job offers. And the hiring splurge continues.
But it won’t be anywhere near the number of people that the rest of the government has shed.
And the federal government moves slowly in onboarding new people – it takes from several weeks to months between job offer and being on the payroll – so it may be a while before these folks show up in the nonfarm payrolls data by the BLS.
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I know at my state employees tend to be older than average work force age. I wonder how many they took deferred resignation then just took that right into retirement. If something like that happened to me as a state worker I would go right into retirement and pension but be happy to get deferred to get added service credit.
In terms of nonfarm payrolls of government jobs, it doesn’t matter if an employee retires, goes into early retirement, uses the Fork in the Road program, gets laid off, or gets sacked. In terms of nonfarm payrolls, it’s all the same: -1 job.
There were separate waves of early retirements (VERA) and regular retirements. If approved for VERA, workers got full retirement benefits and health insurance, and they could combine both. But like I said, it doesn’t matter for nonfarm payrolls. It’s -1 job.
I was just thinking in terms of how many of those would even try to reenter the market. Plenty of people I work with at the state have 20+ years so solid pension plus 100% medical so they are in reality working for a fraction of their salary. And it isn’t because they love their job, but often just not doing the math. But as you said, not a significant amount in the big picture anyway. Will be interesting what happens if Dems win in four years or 8 or whenever things enivitability flip again.
Anecdotal from my neck of the woods, but most at my site took it for retirement.
I thought about it myself, but to start a second career, but no cola until age 62 would have destroyed my pension- I am 50.
I’m in FRS DROP deferred retirement at the moment. Officially, retired 5 years ago but still working while my pension is in a trust fund. Once I separate from service, I’ll do a direct rollover for the funds while drawing a monthly pension check for life. Win win for me.
This is good news for interest rates. Feds hand will be forced as unemployment continues to tick up.
It won’t have any impact because the Fed knows exactly what this is, and Powell will mention it, and will talk about private sector employment.
This answered the exact question I had, as I wondered whether this timing artifact for an upcoming latent “bulk report” of all the previously deferred resignations might be disingenuously cited as another “excuse” for more rate cuts amidst an ongoing inflationary environment. It seems like the right thing to do that the Fed should clearly note this issue and look beyond it, rather than allow it to be lost in a single reported labor metric that’s temporarily distorted and left unexplained.
Rusty I agree.
Cut federal employees, raise unemployment, pushes Fed to cut….
win win for DJT. More asset appreciation, higher stock prices. (close year at all time highs)
DOGE 2.0. Many jobs will be eliminated.
J J Pettigrew
Your goofball conspiracy theory shows just how hard basic math is.
The numbers are too small to move the unemployment rate. See math below.
Plus, the unemployment rate is based on the household survey, not the establishment survey, and under the household survey, retirees who are not looking for a job are considered retirees and not “unemployed.” So federal workers who retired or took early retirement and are not looking for another job don’t count as unemployed. And federal workers who found another job do not count as unemployed either.
The 97,000 decline in federal workers through August has already been incorporated in the data, and the total unemployment rate with them in it was 4.3%, which is historically low.
If half of the 100,000 of the “Fork in the Road” people are looking for job in October, that would add 50,000 to the 7.384 million unemployed, and the unemployment rate would rise to … 4.3% … it would not rise at all, but the additional 50,000 would get lost as a rounding error.
With less rounding, the unemployment rate was 4.324%. Those 50,000 would increase the unemployment rate to 4.327%. So still 4.3% rounded.
Instead of doing the basic math, people come up with goofball conspiracy theory. And other people believe this shit and spread it. That’s why the internet is such a toxic place.
It could, however, explain the fast falling labor participation rate.
The overall labor participation rate has been falling for 15 years because the largest ever generation started to retire back then.
The 25-54 participation rate, which eliminates the issue of retirements, is near its high of 1999.
J J Pettigrew
People will do anything to try paint him as some kind of secret genius won’t they? Meanwhile he’s standing on stage claiming he told the CIA about Osama Bin Laden in 2000 because he just knew he was suspicous. Apparently he even told Pete Hegseth who would have been in college at the time.
Federal employment is already at a record low as a % as Wolf has shown. If we want to reduce the deficit and slow down the economy taxes will need to go up. Tariffs do that a bit, but we’d need a lot more to make a serious impact.
Even wilder is the yarn he told about his uncle and the unabomber. George Santos-level Canadian girlfriend stuff, but lost in the zone.
What’s always lost is that our debt level is not the relevant reference, but rather our debt level relative to other nations (and their ability to enforce their repayments). In this context, we are doing quite well.
I live in Titusville Florida, next to Kennedy Space Center. Almost every neighbor is related to the space program. Two close neighbors took the buy out program and retired. Both complained that NASA had just become a work program, and nobody was really working. One guy took the buyout, got a job with SpaceX, and quit after a month complaining that they expected a full 8 hours of work everyday, sometimes 6 days a week. But they all retired well, lots of traveling and home improvements.
As the saying goes, “Correlation does not imply causation” but might there be a connection between the data we see in “Federal Government, Civilian Jobs, Est. for Sep & Oct, Millions” and debt out the wazoo? The money got distributed and some of it ended up being used to hire permanent federal civilian employees? There was a ramp-up from mid-2022 to end-2025. So was this just debt-funded government expansion, versus an actual permanent need for government workers? In other words, did we have a “business plan” to support the hiring?
We have had a lot of crazy politization of all things government, but maybe the story is simple, in that we hired too many civilian federal employees too quickly using debt to pay them, the economy did not expand quickly enough to pay them with tax receipts, and so now we need to correct that mistake, and lay them off?
During the hiring boom in 2021-2023, 14,017,000 total payroll jobs were created, but only 80,000 of them were federal government jobs = 0.6%.
Unfortunately, ”federal GUVmint jobs” are just the top of the iceberg.
As a survivor of an attempt to be helpful in local guvmint a couple decades ago, first I found a job where I could do ALL that was needed in spite of being one of five in the position.
Then, when I dared to suggest simple steps to reduce the workforce, those suggestions were totally ignored…
IMVHO, ALL govMINT needs to be reduced to basics, and soon…
OTOH, watching local guvmint manual workers, they are competent, so again IMVHO, the problem is at the managerial level and above.
Also, those federal government jobs cost a maximum of 100,000x$100,000/yr = $10 billion. Sounds like a lot until you realize it’s 1/10000 of our economy, 1/700 of the total federal budget and 1/180 of the total deficit.
All that worrying for less than 1%!
Yes. But the place where it will show up bigly is in the month-to-month nonfarm payrolls gain that everyone pays attention to. That’s why I posted the article.
I mean, even a strike at Boeing throws that nonfarm payrolls gain out of whack.
Agreed.
Sorry, I meant to respond to Stymie, letting them know that this isn’t and can’t be the explanation for the federal deficit.
Also you’d never know from the politicized headlines that government jobs as a percentage of overall jobs is the lowest it’s been since 1939. Thanks for pointing that out, Wolf. It’s one of those stats nobody talks about. We’ve been living in the era of small government for a long time now.
I have many friends and relatives in the DC area. Federal contractors expaneded hugely in recent decades and are now being defunded. How are the federal contractors counted in payroll statistics? Is the government link captured in the data annotations?
They show up in the private sector categories, such as “Business and professional services” — we can see some declines there but don’t know whether that’s government related or just private sector causes or a mix.
It’s wonderful for economies when government science and health jobs are replaced by more government goons with guns.
Can you draw any conclusions from this about the future?
Mountain,us hunters in US make one hell of a large(much larger then govt.)armed army.
MountainTime,
Government goons is always a scapegoat. These are your neighbors, fellow citizens and so on. You can’t be both pro-US and anti all the things it does both here and around the world since we are “sold” as the world’s greatest democracy, admittedly with 33% participation. History does have some solid lessons however so a subjective matter if we are already clearly on the road to fascism. My take is no, just that we have had this since post WWII and only really now having all the decisions to benefit the few versus the many finally catching up with us. But whatever happens next, our democratically elected leaders will go down swinging versus adaptation, and while we might still be the one with the biggest muscles in the ring, strategy is more much important in a fight.
Better than government goons sitting around in an ACed office doing nothing all day.
No one wants to address their main point about cancelling science and health care being bad for the country?
Is it bad necessary if it gets shifted to the private sector?
It seems like a Boogeyman argument
@Eric86,
It’s not something that transfers to the private sector. Government health plays two key roles: funding basic science which is too risky for the private sector, and making sure what the private sector produces actually works safely, which is too easily corrupted by the profit motive. It has actually been a pretty successful public/private partnership: the government funds the basic science, the private sector turns that into successful products, and the feds make sure those products are safe and effective. You see that same pattern throughout US high-tech industries.
Vaccines ARE developed by the private sector. But if the Govt’s lead health guy tells you vaccines are useless or bad. it doesn’t matter how good they are.
BTW: When an anti-vaccine guy shops for a puppy, does he ask if it’s had its shots?
Those who expect too much from government deserve to be disappointed.
Health & science, really?
How about national defense, treaties, and trade and say we leave it at that.
All other rights not enumerated remain with the states.
Sure. The U.S. spends way more than any other country on health and related R&D. The result is declining life expectancy, and high levels of chronic disease.
Time to stop wasting money on high tech medicine and concentrate on basics like personal responsibility.
Exactly. These are things that we know eventually pay off, but pay off too slowly for the private sector to invest in. This is well documented. In some ways it is similar to K-12 education. We also know that is highly beneficial to society, but the private sector won’t invest in it because there’s no way to monetize it in a short enough timeframe.
Oh thank God. If only my friend had more personal responsibility she wouldn’t be doing of brain cancer at age 30.
@Old guy
Sure, lets let the private sector advance science better than the government did. I am sure they will have no problems duplicating the government projects like the computer, the internet, the human genome project, the manhattan project, antibiotics, and the space race. I am sure your life hasn’t been affected by those at all.
I agree that canceling basic research grants in science of all kinds would be an error. Is this happening?
If funding for DEI initiatives and the regulatory state is being cut, I would suggest that would be in accordance with the will of the people.
The cuts so far have seemed like a very blunt instrument without a lot forethought.
And the focus on employees is misplaced. Entitlement spending is totally out of control.
OMB Russ: that’s not good enough. All gov branches should cut
spending by 20%, from essential and nonessential programs. By Nov
2028, before Trump leaves, gov debt will drop to the $25T/$30T range.
The private sector will takeover. Trump will rejuvenate the US for decades,
consolidating the US superstate
The pro-corruption, anti-constitutionalist movement’s administration is hiring
Private sector cannot take over .gov operations like that. There are so many legislative hurdles to prevent such takeovers. I personally think privatization is a very bad idea. The shut down will be over in a couple of weeks with a CR.
How is the govt debt going to drop by 2028 when there is a huge government deficit every year?
yes the billionaire need another tax cut
Michael: Always the undying optimism.
The “logic” in your comments is seemingly sound, until one realizes that you are applying it to the US Government.
The debt has not substantially or sustainably dropped… ever (in the modern era).
Re: But the next nonfarm payrolls report, to be released on November 7, Congress willing, would include those 100,000.
Seems the Fed typically doesn’t implement policy without its proper dose of data — maybe this time is different?
2018–2019: This was the longest government shutdown in U.S. history, lasting 34 days from December 2018 to January 2019.
The Fed did not change rates during the shutdown.
Similar to 2013, the shutdown delayed the release of important economic data, which impacted the Fed’s ability to assess economic conditions.
“… the key issue during a shutdown is the unavailability of crucial economic data, such as employment and inflation reports, which are produced by furloughed government employees. This “flying blind” scenario can cause the Fed to become more cautious, as it lacks the full picture of the economy.”
Will they fly blind, navigating through the fog, or will they lower the mast and wait for the storm to pass?
“Powell has emphasized that the Fed must remain “data dependent” and assess progress “based on the totality of the data”. The metaphor describes the challenge of steering the economy toward the Fed’s inflation and employment goals while facing incomplete information and unpredictable risks. This requires proceeding carefully and adjusting policy as new information becomes available, rather than blindly following a theoretical path.”
If I was in the FOMC, I’d say “no data, no rate cut”. Let the politicians know they need to do their jobs before anyone else can.
But these people are all scared for their jobs so they’ll cut anyway. BUYING GOLD and selected foreign currency.
Trump is dismantling the US civil service because to him, their work is all woke b.s. (including the folks who prepare the jobs report) and they vote for Democrats anyway. The damage will be profound and long-lasting.
Alba you are suffering TDS which is understandable but you are incorrect in your hypotenuse. FDA and USDA captured by Big Sugar in the 1950s. Now there is ample evidence NIH, CDC, FDA snd USDA fully captured by the industries they ‘regulate’. Back and forth through revolving doors they go.
Brigham Buhler gives a great insight into this industry capture on Rogan. There is good reason many of us have lost trust in our once great institutions. They have been hallowed out by corporatism and greed.
Sure hope you are right. As far as the jobs report, I always wait for the seventh revision! That way I know what happened months ago.
Wolf with all due respect I’ve enjoyed your website for many years but with the way the stock market goes up relentlessly day after day week after week there’s really nothing more for you to say. Everyone should just put their life savings in the stock market and lean back and relax smoke a big fat cigar and enjoy the wealth. What’s the point of paying attention to all of these obscure numbers and facts and figures when all you have to do is put your money into the stock market they get 1% a week That’s a tough one to resist.
A lot of people are thinking that. Just watch it go up, there will always be a bigger fool to pay more for it than I paid for it….
Comments likes yours — and the fact that so many people think that way — are incredibly scary.
Yes, and as I’ve said for a while now, current market conditions have nothing to do with rates (you can still get 4-4.5% in risk-free returns, depending on duration) and nothing to do with the Fed’s balance sheet, as it’s back to where it was in April of 2020, when the S&P was 65% lower than it is today.
It’s all about psychology. It’s all about investors believing “The Fed will never let the stock market drop” or “The powers that be will never stop pumping this up.” They believe that there is not only the ability but the desire to do this forever.
There’ll come a point that the Fed and Congress will get to a fork in the road, where they have to pick saving the bond market and saving the stock market.
Stonks only go up!
Agree, this is a 1929 mindset
We’re living 1929 on steroids.
It goes up 1% a week until it goes down 33% in a week…
Or more, and stays down. People don’t believe that a Nikkei style drop is possible.
Even a broken clock is right twice a day.
So far doom and groomers have a worse record than a broken clock.
I hear what you’re saying and I share the same frustration about how irrational the market currently is, but as the saying goes, be fearful when everyone is greedy and be greedy when everyone is fearful.
The worst time to buy stocks is when everyone “knows” the market only goes up and has put every last dollar into the market. It means there’s literally no greater fool left to sell to, and all these retail investors will stampede to the exits the minute there’s a slight downturn.
Conversely, the best time to buy stocks is when the average joe thinks it’s stupid and irresponsible to do so. It means the only people in the market are diehards with nerves of steel who won’t sell, and so the market will likely go up.
If course if I could predict the exact top and bottom of the market I’d be a billionaire :)
Crazy how low the share of federal workers has become, but deficit spending is still out the wazoo. I hope this isn’t a spend a dollar to save a penny situation. When private businesses run extremely lean, corners are cut, opportunities are missed, and excess work gets outsourced at a higher expense. I imagine some our Federal agencies work similarly.
Salaries are a very small portion of Federal spending. Most spending is transfer payments/entitlements/non-personnel outlays.
Social Security and Disability are self-funded and are NOT PART OF THE BUDGET and are NOT PART OF THE DEFICIT.
Quit spreading this toxic BS here!
10000 jobs eliminated @ 0.15mn USD annual salary = 15bn annual salary savings.
This is 15bn annual and 150bn over 10yr period.
If govt can eliminate 30000 jobs it will be close to 0.5tm. This plus 4tn from tariffs is decent deficit savings
But Medicare is also an entitlement and is from self funded. You picked out two examples that are self funded for now and left out the fact that the poster is correct. Transfer payments and entitlements are much larger drains on the general fund than employee salaries. Don’t get so defensive about your social security wolf. Your generation will drain it soon enough and make sure the next generation takes a cut in benefits.
1. Part of Medicare is self-funded, and part of it is in the budget.
2. Don’t confuse Medicare and Medicaid. They’re separate programs. All of Medicaid is in the budget.
3. Medicare is for people over 65. Medicaid is for low-income people of any age.
4. SS Old Age and Disability is by far the largest program in terms of receipts and payouts of any of the programs, and it’s self-funded and not in the budget.
5. I have zero tolerance for commenters who spread lies about SS. Zero. I boot people off this site for that.
6. It’s largely boomer money that caused the SS Trust Fund to balloon starting 40 years ago; benefits and retirement ages were reconfigured for boomers under Reagan so that this cash would accumulate over the decades so that there is now $2.5 trillion in the Trust Fund as boomers are retiring, up from near-zero in the late 1980s.
Since Medicaid and Defense aren’t going to get meaningful cuts, the problem is A) historic deficit spending, and B) low taxes. But of course, we just cut a load of taxes for the wealthiest households. Who needs gift taxes, death taxes, corporation taxes, private equity or the wealthiest of business owners? Who needs to even pay when we can just cut IRS funding? Not when we can just pump that debt up more.
There’s a reason why people are fleeing the USD and moving to gold, republicans blame spending they know won’t be falling much further with one hand and pump up the deficit with tax increases to the rich with the other. As long as the party doesn’t stop, they won’t care.
It’s amazing how small the fed government is now compared to population growth.
Wonder what fed government productivity gains since 1980 look like compared to the private sector.
And also compared to other developed countries as a percentage. The idea that big government is bad only exists in this country as our government does little for the people compared to the comparative countries.
And a lot of those other countries are now heading into huge economic problems, as their economies slow, or even contract, and their spending is way too high. Look at France – where another Prime Minister just resigned – where both spending and debt to GDP is ballooning. Look at Germany, which is de-industrializing (due to following idiotic Net Zero policies). Look at the UK, which is also having problems due to following Net Zero policies that have raised electricity/energy rates significantly. These are the countries that are the leading edge, and I doubt the rest of Europe will be more than a decade to 15 years behind, if that. They’re all having very low population growth, and thus running out of other people’s money to spend. Yes, they may have a better work/life balance, for those who have jobs, but their unemployment rate is much higher than here, particularly for young people.
Yes all those terrible terrible European countries with their yucky affordable, housing, universal healthcare, low crime, much lower working hours, protected rights, greater privacy, high life expectancy and higher education outcomes, a place where mass shootings practically don’t exist. Can you imagine having the level of happiness they enjoy compared to us Americans? Yuck, who on earth would want all that…
At least we can point to our troops, our guns and our economy! Go America!
yes the billionaires need more money because government will spend it helping people and advancing the country instead of helping billionaires. a few hundred have more wealth than a couple hundred million.
The Federal Agency I worked for and retired from a decade ago could have eliminated 85% of the contractor jobs and not lose an ounce of functionality. The government workers were working 60 to 80 hours per week including many hours at home in addition to the work in the office. I left because the contractors who were completely incompetent and corrupt had taken over the Agency.