DOGE Actions Contribute to Highest Level of Layoffs Since 2020

President Donald Trump’s federal workforce reductions helped spike the number of planned layoffs announced in February to the highest monthly level since the convulsions of the pandemic. 

U.S. employers announced 172,017 layoffs last month, the highest monthly count since July 2020, with more than one-third — 62,242 — of the total attributed to planned federal job cuts, according to reporting by outplacement firm Challenger, Gray & Christmas. 

Including January’s announced layoffs brings the 59-day total to 221,812, the highest number for the first two months of the year since the 2009 global financial crisis. 

Planned layoffs are gathered from public company announcements about downsizing, not actual separations. If measuring by actual job loss in the U.S., nothing in recorded history compares to the 20.5 million workers who lost their jobs in April 2020 following the pandemic-induced economic shutdown. 

“With the impact of the Department of Government Efficiency [DOGE] actions, as well as canceled government contracts, fear of trade wars, and bankruptcies, job cuts soared in February,” said Andrew Challenger, senior vice president at Challenger, Gray & Christmas. 

DOGE has been laying off nearly all probationary employees who have not yet gained civil service protection and offering buyouts to federal employees to quickly reduce the size of the government workforce. 

While some of those actions have been put on hold by federal judges, agencies continue making layoff plans. Veterans Affairs Secretary Doug Collins said there is a goal of cutting the agency’s workforce by 70,000-80,000 people, and the IRS is drafting plans to cut its 90,000-person workforce by half through a mix of layoffs, attrition, and incentivized buyouts. 

“It appears the administration wants to cut even more workers, but an order to fire the roughly 200,000 probationary employees was blocked by a federal judge,” Challenger said. “It remains to be seen how many more workers will lose their federal government roles. When mass layoffs occur, it often leaves remaining staff feeling uneasy and uncertain. The likelihood that many more workers [will] leave voluntarily is high.”  

Weekly data on unemployment insurance claims is just beginning to show a surge in filings from laid-off federal workers, particularly in Washington, D.C., with its large share of government workers. Some economists forecast total job losses from the federal government could top half a million by the end of the year. 

That damage was not yet apparent in the latest employment report from the U.S. Bureau of Labor Statistics, but the impact of the downsizing is expected in next month’s report. 

There is also concern that private-sector companies that do business with the government will begin to slash payrolls as DOGE, spurred by billionaire Elon Musk, pushes agencies to cancel federal contracts and freeze funding. 

Trump on March 6 said he directed Cabinet secretaries to use a “scalpel” rather than a “hatchet” to make cuts, a directive intended to ease blowback after waves of job cuts shocked the federal workforce. He added that the Cabinet would meet every two weeks to discuss the government overhaul until the workforce is downsized to where it “should be.” 

The Challenger report comes amid heightened concern about the state of the U.S. labor market and the economy in general as Trump’s plans for spending, tariffs, tax cuts, and immigration restrictions take shape.