Trump is shrinking government payrolls. And another big cut is coming.
Worker Buyouts Kick In
The Wall Street Journal reports Federal-Worker Buyouts Are Kicking In, Darkening the U.S. Employment Picture
Some 100,000 federal workers came off the government’s payroll this week, the latest bit of unwelcome news for the softening U.S. labor market.
The departures coincide with the government shutdown, which could bring another round of cuts.
The trims stem from the Trump administration’s deferred-resignation plan, launched earlier in the year, which allowed staff to leave the government and keep their paychecks and benefits for months. About 154,000 employees took the deal, according to the Office of Personnel Management, and two-thirds were paid through Sept. 30, the end of the fiscal year.
Overall, the administration expects the federal workforce to end the year with hundreds of thousands fewer employees, attributed to a hiring freeze, layoffs and voluntary departures. Trump has also threatened to permanently lay off additional workers in connection with the shutdown, which temporarily furloughs an estimated 750,000 people, according to the nonpartisan Congressional Budget Office.
Federal workers’ job applications on Indeed rose 41.2% from January to September, according to the platform. But Frank Grossman, a Philadelphia-based career coach working with federal workers, said many who took the buyout options haven’t looked for jobs in earnest.
“Reality hasn’t hit for a lot of people yet,” he said.
The government shutdown could soon darken the job picture even more.
Furloughed federal workers may show up as unemployed in the part of the jobs report used to calculate the unemployment rate, Sweet said. Any new layoffs tied to the shutdown combined with the workers who took the deferred resignation program could mean “a hideous employment report could be coming,” he said.
A Hideous Jobs Report When?
The Bureau of Labor Statistics (BLS) the household survey’s reference period is the the 7-day period, Sunday through Saturday, that includes the 12th of the month. The household survey determines the unemployment rate.
The establishment (payroll) survey’s reference period is the pay period for an establishment that includes the 12th of the month. This is the nonfarm payroll report.
For the Job Openings and Labor Turnover Survey (JOLTS), job openings have a reference period of the last business day of the month, whereas hires and separations cover the entire calendar month.
JOLTS will not be impacted because that data lags a month.
So, even if we had a jobs report on Friday, none of those 100,000 would have impacted the reports because everyone was paid for the calendar week that included the 12th. This implies they were employed for the household survey.
Changes Since January 2025
- Federal employment was 3.015 million in January of 2025.
- Excluding postal workers (which were not laid off), employment was 2.410 million.
- As of August, Federal employment was 2.918 million, down 97,000. That’s a decline of 3.2 percent.
- As of August, Federal employment excluding postal was 2.325 million, down 85,000. That’s a decline of 3.5 percent.
If employment drops another ~100,000 then Trump will have cut ~7.7 percent of government workers excluding postal.
Q: Is that a bad thing?
A: If the layoffs were properly targeted, then it’s a very good thing.
Some might suggest it’s a good thing regardless. But there is a difference between turning things over to the private sector responsibly rather than haphazardly.
These reductions should have been in a bill, but Congress is broken.
Will Republicans Cave on Democrat’s Government Shutdown Demands?
I expect the shutdown will end by the end of this month. Republicans will cave and offer the Democrats a deal.
Everyone will brag about the deal, especially Trump.
For discussion, please see How Quickly Will Republicans Cave on Democrat’s Government Shutdown Demands?
Democrats’ Strategy
If Democrats can hang on for the rest of the month, healthcare premium notices will be sent.
Consumers can start shopping for next year’s coverage on November 1. Some ACA participants have already started receiving notifications about next year’s premium increases.
About 24 million people are enrolled in ACA (Obamacare) coverage. Roughly that many people will not be happy with sticker shock.
DaveFrom Denver:
But here is a Fact (Data posted daily by the Treasury Dept)
In Fiscal Year 2025 our Deficit was $2,173.
In Fiscal Year 2024 our Deficit was $ 2,297. Biden’s last year.
How did that happen and nobody noticed?
Mish:
Are we bragging about a $2.17 trillion deficit?
Down a mere 124K.
And did you factor in Trump’s proposed golden dome?
The compromise coming up to extend Obamacare?
Farmer bailouts?
Pending aid to Ukraine?
Biden set aside 350B for student loans which was counted as spending under 2024. This money returned back to treasury as court said Administration can’t pay down the debt. So, you subtract that amount from 2024 spending and add it to 2025 spending. It would go from 125B less to 400B higher in 2025.
Oh man, just when I thought trump was “winning”. LMAO! 😉
Um… $190B of that was used towards student debt. So remove that from your math and that would be your number, but after you subtract the legal bills associated with it too, there is $0.00 Left Over.
Good try though…
It’s NOT just “debt”.
When you take something you cannot repay nor replace it’s THEFT.
We robbed the world.
We are robbing the world.
We broke our own laws (US Constitution Article 1, Section 10).
We are breaking our laws.
Enter consequences.
Now.
That’s it? Fire all 10 million of them!
Hey Mish,
I would love to get your take and have a discussion regarding what many perceive as the AI bubble.
You nailed the housing bubble back in 2006 and were way ahead of the herd in calling that one. It allowed me and a few friends to get out of some extra real estate before the crash. Thank you again!
I’m all over the circular financing and the fact that 95% of AI deployments are not revenue positive yet. I am also aware that the spend is tremendous on both the chips and building out the data centers.
The talking heads on CNBC and FOX financial channels are mightily positive on the sector but I do not see decent exit strategies for investors at these valuations.
Help Mr. Wizard!
😉
Frosty there is a podcast called this week in tech. You should check it out. Covers everything from whats new to legal issues.
The September 28th issue was all over the AI “Bubble question”.
One of the conclusions was that investing in AI has been going on for ten years and it has yielded great results. In fact, it generated so much cash that people were starting to get upset that it was not being deployed. That has recently changed and now so much of it has been deployed that the new money is coming from debt. (see Nvidea’s 100 Billion investment in Open AI ~ Nvidia has only made $100 billion in the last ten years!). So all of their profits are in one scaled investment.
We have 95% of new AI deployments as not making a profit and now they are being financed by debt. A screaming indictment that this is a bubble.
Extremely bullish for the stock market.
Every 110 point rise in the S&P500 puts $1 trillion in untaxable “unrealized gains” in the pockets of just the holders of S&P500 stocks, even more if other stock are rising, too. Just realizing a fraction that puts a lot of spendable cash in the hands of the wealthy.
And the trillions of interest on the debt can be used to buy still more stocks and junk bonds. As long as foreigners have to buy our assets to vendor-finance our imports, no problem financing the burgeoning deficit.
Ahhh, the wealth effect is real!
I’ll give you a thumbs up because it is working and I’m super happy with my returns this year. But watching the bobble heads on TV foaming at the mouths over AI sure gives me the heeby jeebies about this bubble bursting!
You cannot “realize” your gain without someone else paying up a lot of hard cash for the shares you sell. Net zero effect.
The problem is when people borrow against their shares and spend the new debt. That never ends well, and it’s worse when the after-tax dividend yield on the stocks is below the after-tax interest rate in the debt.
The size of the government should be relative to the job its required to do. People want to cut gov spending by cutting jobs. Maybe just maybe its an income issue. I wonder where we would be with the tax rates before Regan started to lower them.
Is there waste. Sure. Is there fraud sure. But is the actual waste and fraud getting addressed by cutting jobs. Or is it enabled. Only 2 percent of medicare fraud is on the patient end. The rest it seems comes from the provider end. Maybe that is what should be addressed.
As i get older im realizing everything affects everything else. Connected everything is.
The government is the largest employer. What effect does that have on the economy when it shed jobs. What is the cost if noaa being short handed botches a hurricane track. Or down to a personal level say a bad forecast cost you a botched vacation or such. Multiple the small personal cost by 328 million and it adds up.
Odd that Trump wants to say he is reducing government regulations and in direct contrast forcing our manufacturers to use more expensive materials and labor than their competition?
Who does Trump work for?
Not Americans!
Business hates regulations because it cost them money. Business and the wealthy hate government having the ability to monitor their behavior.
Thats why the party of business ( republican) cut the irs. Those wealthy dont want to get caught cheating on the taxes.
Im no business expert but even i know you dont cut the billing department.
And yet, the lobbyists demanding more regulations are often paid entirely by business.
Big business loves regulations because they are large enough to throw staff at it for compliance. Smaller businesses that cannot afford to throw staff at compliance get stressed, and often fail or get restricted growth. Regulations elimiate the competition for large companies and allow them to dominate markets while smaller companies languish.
All of this sounds like reason for lower interest rates. Whither the ten year?
Not with this acceleration in debt! I surely do not want to get almost no interest on a depreciating dollar. Only fools will tie up their assets in Treasuries issued while trump is dictator.
“turning things over to the private sector” I’m sure some of the things the government does doesn’t need to be done by any sector.
And the beauty of the private sector is if things shouldn’t be done they won’t be for long. The private sector needs a willing buyer. Government only needs a willing campaign donor.
Slippery slope. Ive seen county government sell the water system to a private company. The rates doubled a year later.
I’m still to see a water or sewage system built by the private sector.
probably because you haven’t looked. Is your position that nobody would want water treatment if if wasn’t for uncle sugar?
https://aqua.evoqua.com/investors/default.aspx
The markets hated Chuck idiocy.
I suspect that many of the 100,000 that took the deferred resignation found new jobs long ago. Even if the those folks were counted in the jobs report I highly doubt it would be close to 100k.
I’m willing to bet that a reasonable percentage of those 100k that retired came back as ICE agents to collect multiple pensions. Law enforcement and fire department employees have this multiple pension skill mastered.
A lot of them should be wearing a mask on their beer bellies.
We need to significantly layoff a lot more then 100,000. We need to cut the deficit/bloat. There are lot of jobs that can be cut with AI.
Federal employee salary and benefits make up about 4% of the total federal budget 60% are in the DoD/DoW and the VA. Firing everyone single Fed would save about $300 billion. The budget deficit in 2024 was $1.8 trillion.
Cutting Fed jobs, while needed in some areas, isn’t going to get the deficit under control.
Maybe even yours.
I retired at age 47.
Pritzker is already taking it easy at his horse farm in Lake Geneva, Wisconsin-
https://cwbchicago.com/2025/10/man-beat-94-year-old-senior-with-a-brick-during-robbery-attempt-near-garfield-park-prosecutors.html
Your boy on the golf course. Using American tax dollars for his fun. Fucking hypocrites the whole lot of you trump supporters.
I’ll add to the above. You right wing fascists/communists object endlessly to funding normal people’s lives with healthcare and education. Pritzker is a billionaire on his own private property with his horses. Remember private property you communist Trump supporters? Meanwhile your dude is hoovering all of our tax money for himself and his family members. I really feel like most of you folks don’t understand anything but numbers and are missing the big picture. By a mile.
“Some might suggest it’s a good thing regardless. But there is a difference between turning things over to the private sector responsibly rather than haphazardly.”
Very good points, Mish! I do think Trump’s administration should have done a much better job with coordinating the jobs cuts to-date & being more transparent.
Trump executive order: WFH is gone. Federal employees 5 days/ week in their offices. Many on Ilan list.
Before Fed min OMB Russ Vought will add 50K/100K federal gov workers to the unemployment line along with their dems pet projects. Russ to JP: we just started. We knew it’s coming, but Chuck Oct surprise was better than we expected. It was a gift from heaven. The deficit doesn’t matter. What matter the most is cutting the $37T debt.
If u have a student loan and c/c debt cutting c/c first is more important than cutting
the deficit.
Trump the billionaire declared bankruptcy 6 times. Nothing like billionaires writing tax law for the billionaires to avoid accountability. But I see your resentment for normal folks needing to declare… so painful for you. Lazy ass non-billionaires. What’s the matter with them? Boot straps losers!!
Yes, the deficit matters. The debt cannot diminish before the deficit spending has been eliminated, it is simple math.
This is an opportunity to replace human government workers with AI/automation, consolidate agencies and departments, eliminate thousands of redundant committees. eliminating data siloing and enable data sharing, all of which will save us taxpayers $$$.
I hope TPTB grab this opportunity.
They’ll grab it all right, and stuff it full of bribery, patronage, and corruption.
I can’t believe how ignorant so many people are about this massive grifter.
He does grab doesn’t he? Pussy, tax dollars. Anything he can. He’s quite an admirable grifter isn’t he. If you could you’d do the same, right?
Roughly speaking, the deficit is $2 trillion per year and assuming a federal worker receives $100,000 per year in salary, benefits and employment infrastructure support, 20 million would need laid off to eliminate the deficit. Layoffs alone are not going to repair the deficit problem, but it is a decent start. Add Trump’s tariffs and we are still woefully short. We cannot inflate our way out of the problem because inflating does not change the math; as long as a deficit continues to exist, the debt grows making the problem worse. Congress needs to make some serious budget cuts now. The longer they postpone making cuts (kick the can down the road) the worse the problem gets and larger the cuts required in the future. Dicking around with a continuing resolution is kicking the can down the road. We have spent ourselves into a position that we will suffer some pain (austerity) to repair the problem. Revenue and or accounting gimmicks will not work.
Russ Vought is cutting dems programs.
Shoot, we just gave that to Argentina because they have a little dictator.
Argentina literally just replaced a decades long fascist regime that you apparently pine for.
… with a rightwing nutjob that already needs to be bailed out by our rightwing nutjob.
I pine for an Argentina that wasn’t taking 20 billion dollars that will be added to the deficit.
I pine for that too. Funny how your crowd had no issue with foreign handouts until 10 seconds ago.
Yes, all that.
That’s what the guy with the charts and big ears was saying 33 years ago.
In what grade do they teach about exponents now?
US economy is already on the edge – a prolonged government shutdown could send it tumbling over
https://theconversation.com/us-economy-is-already-on-the-edge-a-prolonged-government-shutdown-could-send-it-tumbling-over-266327
Arms up everybody! WHEEEEEEEEEEE!
Is that what the shrill “Yves” says?
If Brezhnev had a better printer the USSR would still be around?
Tax the billionaires. Would help. But so many right wingers think being a billionaire is in their future. They can dream. Bless their hearts!
I doubt that the largest employer of the whole wide world will see any reduction: the Department of Def… War!
They’ve declared war on American cities, after all, and there are a lot of those.