The Federal Workforce in Transition

Recent executive orders and related actions demonstrate a concerted effort to significantly reduce the size of the federal workforce, and hundreds of thousands of federal employees could soon be searching for new jobs as a result. In this environment of uncertainty and rapid change, many private-sector employers will be reviewing their corporate recruiting strategies to respond to this new influx of labor.

Given the wide range of legal, regulatory, and practical constraints, the extent, timing, and composition of any cuts to the federal civilian workforce remain uncertain. Consequently, it is not possible to produce a complete forecast about the effect these cuts will have on the U.S. labor market or broader economic conditions.

However, by examining the composition of the federal workforce, we can better understand how a substantial exodus of people from this population would affect U.S. labor market conditions. Let's examine five key characteristics of the federal workforce—occupational group, location, age, length of service, and education—and the implications of mass layoffs on the broader labor market.

The best publicly available data available to examine the federal civilian workforce is FedScope, a database maintained by the Office of Personnel Management (OPM). Although FedScope does not include U.S. Postal Service (USPS) employees, it does capture the vast majority of workers who are likely to be affected by the recent actions aimed at reducing the federal workforce. For brevity and to align with OPM’s standard terminology, we will refer to the employees captured in FedScope as “federal civilian employees” or “federal civilian workers.”   

Note: The numbers in each of the five charts below represents the number of thousands of workers.

1. OCCUPATION: Business, Finance, Health, and Science Lead the Way

The March 2024 FedScope data lists nearly 2.28 million active federal civilian employees. As shown in Figure 1, these employees are unevenly distributed across major occupational groups, with about 743,000 (32.6%) performing work in business and financial operations positions.

It's unsurprising that so many federal civilian workers fall into the business and financial operations group. This is a broad category encompassing fields that feature prominently in government work, including accounting/auditing, logistics, human resources, financial management, purchasing, and project management.    

Other occupational groups with at least 150,000 federal civilian workers include healthcare practitioners; office and administrative support; life, physical, and social science; and management. On the opposite end of the spectrum, the federal government does not employ many workers in fields such as personal care and service; farming, forestry, and fishing; sales; and food preparation and serving.

2. LOCATION: A Significant Majority of Federal Civilian Workers Are Located Outside the Washington, D.C., Area

Federal civilian employment is very common in and around the Washington, D.C., metropolitan area, as this region is home to the headquarters of many federal agencies and a wide variety of other federal installations.

However, even though Washington, D.C., Virginia, and Maryland ranked first, third, and fourth in terms of total federal civilian employment (respectively) in March 2024, this collective employment only amounted to about 450,000 jobs, meaning that a sizable majority of the federal civilian workforce was located elsewhere.

In fact, both California (147,487) and Texas (129,738) had well over 100,000 federal civilian workers each, and Florida (94,014) was close. Only 10 states had fewer than 10,000 federal civilian employees. (Note: About 14.3% of workers in the March 2024 FedScope data were located in a U.S. territory or overseas, or were assigned a geographic identifier of “United States.”)

Beyond occupational designation and location, FedScope provides additional information about federal civilian workers that casts light on how a significant exodus of these employees from the federal workforce might affect the U.S. labor market, such as age, length of federal service, and educational attainment.

3. AGE: A Majority of Federal Workers Are Midcareer to Late-Career

As the FedScope data shows, the age distribution of federal civilian workers is heavily concentrated in the 35-64 age range, with the 35-54 age range alone accounting for over half of all workers.

Relatedly, workers ages 65 and older are slightly less common in the federal civilian workforce relative to the U.S. employed population ages 18 and older. Younger workers (especially those under age 25) are much less common in the federal workforce than the overall U.S. workforce.

4. LENGTH OF SERVICE: Most Have Significant Federal Experience, But Nearly 10% Are in Their First Year

While federal civilian workers vary widely according to their length of service in the federal government, most tend to have at least a moderate level of experience.

According to the March 2024 FedScope data, more than two-thirds of federal workers had at least five years of service in the federal government, and almost one-fifth (19.1%) had 20 years or more. However, about 220,000 employees had less than a year of service, and nearly 290,000 more had between one and two years of experience. These numbers are significant because a major focus of some recent executive actions has been to lay off federal civilian workers who are still in the probationary period of their current positions, and workers with very low levels of total service are far more likely to be affected by cuts occurring through this channel.

Note: The FedScope measurement for length of service includes years credited for federal employment and military service, as well as service earned under a handful of other categories defined under applicable law. Length of service is not the same as tenure in position (i.e., the amount of time a federal civilian worker has been in their current position).

5. EDUCATION: Federal Workers Are More Highly Educated

Relative to the U.S. workforce at large, federal civilian employees tend to be highly educated, with more than half having at least a bachelor’s degree and more than one-quarter (26.9%) holding some level of graduate or professional education. In fact, one major reason there are comparatively few federal civilian workers under age 25 is that many federal jobs have significant educational requirements.

Even so, it’s worth noting that high levels of educational attainment are by no means a universal feature of the federal civilian workforce. In fact, about 650,000 federal civilian workers had a high school degree or less in March 2024.

How Mass Federal Layoffs Will Affect the Broader Labor Market

What do these findings imply in the event that a significant share of federal civilian workers leave the federal government and search for new jobs?  

First, it is critical to note that any national-level labor market effects stemming from such an event will depend heavily on the extent and timing of the reduction in the federal workforce. If the flow of workers out of the federal government is limited and/or occurs over a long period, then the impact on the national labor market will be correspondingly muted.

However, if the outflow is large (i.e., several hundred thousand workers) and rapid, then HR executives should expect to see more significant effects, especially in local areas where federal civilian employees are concentrated.

Assuming the latter scenario, here are some key implications:

Skill Sets and Qualifications:

• Matching skills and jobs. An employer’s ability to attract talent from an exodus of federal workers will largely depend on the types of skillsets that employer is searching for. Organizations looking to fill roles with skill sets that are common in the federal government will likely find they have a broader pool of qualified applicants to choose from. However, companies looking to fill positions that are rare or nonexistent in the federal government should be far less affected.
• Education and experience. The most common federal civilian employee is middle-aged and highly educated with a moderate length of service as a federal employee. Thus, employers who place high value on prior work experience and/or educational attainment may see their pool of qualified job applicants expand the most.
• Specialized skills and the need for upskilling. Federal civilian employees leaving the federal government would likely face a wide range of outcomes. Broadly speaking, the ongoing labor shortage means the average job seeker faces relatively favorable conditions. Plus, some federal workers have highly sought-after skills and would likely face comparatively low difficulty finding new employment. However, other federal workers have skills that are not in demand or are highly specialized for the federal government. For this group, reskilling and upskilling efforts would likely be essential to long-term success.

Geography:

• Fed-heavy regions. While federal workers are spread across the country in large numbers, they are much more common in some areas, with Washington, D.C., Virginia, and Maryland being particularly notable. Employers in areas with a strong concentration of federal civilian workers would likely find it easier to attract talent as those workers exit the federal government and search for new jobs.
• Remote and relocation benefits. Similarly, former federal civilian workers searching for new employment may find that opportunities are limited in their local area. As a result, remote employment opportunities or relocation benefits may be especially attractive to these applicants.

Broader Economic Implications

Of course, a scenario in which large numbers of federal civilian workers suddenly exit the government will have broader economic implications, especially in local areas that have heavy concentrations of federal employment.

Similarly, if the mass elimination of federal employment is accompanied by similarly large reductions in funding for workers adjacent to federal government operations (e.g., federal contractors), then the set of US. workers affected would expand considerably, as would the broader economic effects.

Justin Ladner is SHRM’s senior labor economist and previously served as the senior policy advisor at AARP.