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.
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the mug to find out how:
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 doth. But like I said, it doesn’t matter for nonfarm payrolls. It’s -1 job.
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.