How the Trump and DOGE terminations — perhaps the biggest job cuts in history — may affect the economy

The Trump administration’s purge of federal workers may ultimately amount to the biggest job cut in U.S. history, which is likely to have ramifications for the economy, especially at the local level, according to economists.

The White House, with the help of Elon Musk’s so-called Department of Government Efficiency, has fired or offered buyouts to workers across the federal government, the nation’s largest employer.

While the precise scale of the job cuts is as yet unclear, evidence suggests it’s at least in the tens of thousands so far, economists said.

The Trump administration directed federal agencies to dismiss “probationary” employees. Probationary workers are more-recent hires who have been with the federal government for only a year or two and who do not yet have full civil service protections.

There were about 220,000 federal employees with less than a year of tenure as of May 2024, according to the most recent data from the U.S. Office of Personnel Management.

Additionally, more than 75,000 federal workers have accepted a buyout offer, according to a Trump administration official. They agreed to resign but get paid through September.

The total of these two groups — nearly 300,000 workers — would make these actions amount to the “largest job cut in American history (by a mile),” Callie Cox, chief market strategist at Ritholtz Wealth Management, wrote Tuesday.

That sum doesn’t include others who may be on the chopping block, such as contractors who work at the U.S. Agency for International Development. Career civil servants who got promotions in the past year are also at risk of losing their jobs, since they’re technically on probation in their new role, Jesse Rothstein, a public policy and economics professor at University of California, Berkeley, said in a podcast Thursday.

Job cuts have come from across the government, at agencies including the Internal Revenue Service, National Park Service, Consumer Financial Protection Bureau, and the departments of Agriculture, Education, Energy, Health and Human Services, Homeland Security, and Veterans Affairs, according to the Associated Press.

“We may soon find out the hard way that people drive the U.S. economy,” Cox wrote.

The ultimate number of cuts isn’t likely to be as high as 300,000, economists said.

For example, there may be some crossover: Probationary workers who would have been fired may have accepted a buyout. Also, in some cases, the Trump administration tried hiring back workers who’d been terminated.

Public disclosures show more than 26,000 federal workers have already been fired, excluding buyouts, according to a research note Wednesday from investment bank Piper Sandler.

That’s about the same number of workers who lost their jobs when Lehman Brothers collapsed during the 2008 financial crisis, for example.

But Thomas Ryan, a North America economist at Capital Economics, estimates that between 100,000 and 200,000 federal staffers have probably already been let go.

That would handily beat IBM’s 1993 purge of 60,000 workers, thought to be the largest corporate layoff in U.S. history. Among other notable corporate cuts, Citigroup and Sears, Roebuck & Co. each slashed about 50,000 jobs, in 2008 and 1993, respectively.

“Certainly if all 200,000-plus probationary workers are fired [without replacement] that would be historic,” Susan Houseman, senior economist at the nonpartisan W.E. Upjohn Institute for Employment Research, wrote in an e-mail.

Even among prior federal layoffs, the scale of potential cuts appears unprecedented, experts said.

The U.S. Army, for example, eliminated 50,000 jobs in September 2011 as former President Barack Obama withdrew troops from Afghanistan and Iraq, according to outplacement firm Challenger, Gray & Christmas. The U.S. Air Force announced plans in 2005 to reduce head count by 40,000, the firm said.

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