Federal Job Cuts Won't Change Unemployment

Jobs

Published: February 24, 2025 9:15 am

According to the Bureau of Labor Statistics, the civilian U.S. labor force is just above 170 million people. That means that each percentage point of unemployment represents about 1.7 million Americans. The total number of federal employees is 3 million, excluding active members of the military. The figure is just above 1.8% of the total employed population. Elon Musk and President Trump cannot fire all these people, or even come close. Too many are essential to the operations of the federal government.

24/7 Wall St. Key Points:

Jobs cuts among federal employees are unlikely to boost the unemployment rate much.
Combined with layoffs due to tariffs, though, that might be a different story.
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If cuts reach 10% of all federal employees, unemployment would rise by about 300,000 people. Unemployment, which was 4% in January, might rise to 4.3% or 4.4% at the most. That is about the same increase as in June 2024. The reason given then by most economists was fear of a recession, brought on by high inflation. Inflation began to cool, and the jobless rate began to improve.

Another factor could make unemployment rates jump. However, this is outside the federal employee count. A 25% tariff on goods and services coming from Canada and Mexico, combined with 10% on imports from China, followed by retaliation from those countries, would eliminate 400,000 U.S. jobs.

So, job cuts among federal workers would not change the jobless rate in the United States much. Combined with layoffs due to tariffs, on the other hand, that may be a different story.

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