The labor market is tapdancing into a bear trap. Is Friday the day it snaps?

The Trump Administration's jobs and funding cuts will hit the hiring market on multiple levels. Will Friday's jobs report change anything? And what should we be doing?

The issue

The Trump Administration is working to lay off tens of thousands of federal workers and contractors. Its funding freezes and cuts have caused private-sector job loss, too. The first jobs report likely to show the effect of these cuts is coming this Friday.

Will a bad report change anything? And if we’re committed to this cutting, how can we soften the consequences?

Wait, what?

Last month, analysis by the firm Challenger, Gray, & Christmas showed that job cuts surged nearly 250 percent between January to February, with the government leading all sectors with more than 60,000 job cuts.

The Challenger analysis published the day after the Department of Veterans Affairs announced at least 80,000 in job cuts. Since then, the Administration announced up to 10,000 layoffs and 20,000 overall job cuts at the Department of Health and Human Services and cut hundreds more jobs at places like the Department of Education. This past week, my former career colleagues at the Department of Labor received a request for records key to making mass federal layoffs.

TL;DR: There are going to be a lot of unemployed federal workers soon.

The federal government wasn’t the only employer hit by the Trump cuts and freezes, which caused thousands of layoffs and furloughs in the for-profit and nonprofit sectors. Cuts and the threat of tariffs like the ones going into effect tomorrow also significantly downshifted American employers’ hiring plans. Additionally, last week the Department of Health and Human Services cut $12 billion that helped employ hundreds of state and local health and behavioral health employees. There also likely will be downstream effects to the service industry in areas heavy on federal staff.

TL;DR: There are going to be a lot of unemployed non-federal workers soon, too.

We may get a sense of how bad things are in this Friday’s jobs report, which captures the hiring market and unemployment rate in March. While many federal cuts happened in February, the time delay in how the Bureau of Labor Statistics captures data means this Friday’s report may be the first to show impact.

Because you too have access to the internet, you probably know the economy isn’t looking so hot and getting rid of all these jobs won’t help with that. This analysis, for example, found that “[n]onfarm employment year-over-year is currently at or below the level at the start of 9 of the 13 recessions that have started since 1940.” Consumer confidence is way down too. This weekend stagflation entered the conversation.

Jobs reports are annoyingly hard to predict, and Friday’s report could be muddled because of the stop-start nature of the Trump cuts. As I have written about before, many of these cuts have been sloppy in the details, leading to court inventions you don’t see in the private sector. That may “save” the Administration in the short term, and muddy the results of this week’s report. Speaking from my experience inside term one, “muddy” is a greenlight to stay the course in Trumpworld.

Muddy or not, basic logic says a negative impact is coming from this cut. If not this week, then very soon.

“I would be shocked if there wasn’t a significant slowdown in hiring,” said S.J. Glynn, DOL’s former chief economist and a former colleague. “The economy had been cooling anyways . . . When the economy is on shaky footing, employers just stop filling positions.”

What some economists have missed about these cuts.

To be blunt, generations of lazy political messaging mean many people tend to think of all government as an endless series of DMV windows staffed by underpaid workers that have few skills but “waste time” and “be rude.”¹

The federal government isn’t that, and it isn’t just one type of employer, either. It’s the largest employer and one that wads together many different job types and sectors to fills gaps the private sector can’t or won’t. Some of those jobs can have applicability elsewhere. Plenty don’t, and there is reason to be concerned about long-term and permanent economic consequences from ending those roles.

Many in workforce development are already well aware of this, but the rest of the world hasn’t caught on yet. For example, I read this analysis in February:

[Thomas] Ryan, of Capital Economics, said the scope of federal layoffs is relatively small when considered in the context of the U.S. labor market, which added roughly 1.5 million jobs in 2024. He said he expects most displaced federal workers to be rehired quickly since the economy is near full employment, “making any pain short-lived.”

All due respect to our brother in econ based out of London, an ocean scientist who made $200,000 as a federal employee can’t easily replace their job by walking down the street to work the grill at Chipotle. Even if the flavor of government done by that scientist eventually gets privatized, that takes time, and there is no guarantee that the federal scientist who just got fired will be re-employed at the same wage level. Or if the job is in their state.

Feds landing in other government jobs probably won’t dull the economic impact of these cuts, either. There are admirable efforts by state and local governments to absorb these layoffs, but just because a fed gets another public-sector job doesn’t mean they won’t feel significant economic pain that has downstream consequences.

Fired feds in state and local roles often will make less money due to salary restrictions under state laws² or a natural consequence of budgets funded by a smaller tax base. To offer a specific example (and caveat it’s only one data point), I recently saw a state job almost identical to a job with the same title in the federal government. For a fed moving into that state role, it would be at least a $50,000 to a $100,000 pay cut, depending on the federal pay schedule and the worker’s place in it. For an up-and-comer also transitioning from the federal government, the experience required for the job indicated the pay cut would have been merely $20,000 to $50,000.

So even if fired feds do find other employment, it may involve less pay in an environment where inflation won’t go away.

And people with less buying power buy fewer goods and services.

And when fewer goods and services get purchased, other people start losing their jobs downstream.

Will the Trump Administration do something different if there is a bad jobs report?

This Administration premises itself on the idea that American voters came together in November, seriously considered all the issues, and decided to reward conservative thinktanks by giving them all of their Christmases at once. It’s going to take a lot to make them change approach.

“The market and the economy have just become hooked,” Treasury Secretary Scott Bessent told CNBC a few weeks ago. “We’ve become addicted to this government spending, and there’s going to be a detox period.”

I’ll circle back to that quote in a second, but the big question to me is how long President Trump stays committed to the idea of Heritage Foundation Multiversal Omni-Christmas. Key components poll terribly, and shocking as this may be, there is a question of the President’s ego as well.

The word at DOL during term one was that President Trump identified strongly with the jobs report. Those numbers had to go up, and if they didn’t, someone might get a call. That might happen if a phrase like “worst non-COVID report since the Great Recession” gets tossed around in otherwise friendly press.

That loud of an alarm probably is unlikely in Friday’s report, however, even if the trendlines point in that direction. Glynn said that “[i]t takes a really significant shock” for that type of impact to show up in the national-level data.

But, “There’s no way [the layoffs and cuts are] not going to have an impact,” she said. “It defies logic to think that’s [not] going to happen.”

What should we do about it?

Let’s take this in three parts.

What should have been happening?

A quick aside for some framing: call me woke or whatever, but I built a fairly successful and impactful program during the first Trump term that still helps workers with substance-use disorder. I researched quite a bit about the awful experience of withdrawal to figure out how to help workers going through it. The permanent altering of brain chemistry means relapse is a perpetual risk. I wouldn’t make a casual reference to it like Bessent did.

But I did find insight in Bessent’s comment that he probably didn’t intend: if the Administration sees federal cuts as ridding the country of an addiction, why is it trying to go cold turkey?

Addiction treatment is much smoother with treatment to soften the symptoms of withdrawal. If these cuts are part of a fuller jobs policy,³ there should have been a plan for making this all a little easier. It’s part of why “temporary hardship” comments have struck me as underinformed. Change is hard, but that doesn’t mean change can’t be easier.

When I first wrote about these cuts, I suggested that the Administration might ought cut a deal with the private sector to find landing spots for its clearing out of the nation’s largest employer.⁴ You could say this is the type of thing one would do if they fancied themselves a dealmaker and saw tariffs as leverage to create more stateside jobs, for example.

By and large, it’s too late for that now. Many of these former federal employees are in the wind, and the job loss from other federal cuts likely will take years to sort out.

What probably will happen?

If the Administration recognizes the cuts as a problem, I suspect there will be redirection of existing money at DOL for relatively unfettered grantmaking to states using one or more subpots of the Workforce Innovation and Opportunity Act, America’s main source of workforce funding.

This would be very similar to what happened in the first administration to respond to COVID. This is good and bad for workforce programs. The good is obviously “money.” The bad has layers.

First, to get the lightly defined Trumpian version of these grants, states either would need to commit to projects that may not meet their needs in six weeks’ time—when a crisis will have evolved—or they would need create broad enough projects that struggle to treat the issue. Congress didn’t design these grants in a way that they can directly serve people fired by the federal government or any other employer. The grants are meant to help the federal workforce system deal with the strain of the layoffs, not the causes of the layoffs themselves. This means that grantees would have to build the programs broadly enough to serve both unemployed federal workers and other workers unemployed for other reasons. That’s not necessarily a bad thing, but it means fewer direct resources to serve workers affected by the biggest, most complex employment needs in areas hurt by federal cuts.

Second, the continuing resolution passed last month by Congress killed a big chunk of this money through cuts to WIOA formula dollars and the Dislocated Worker National Reserve, which funds big state responses to mass layoffs and natural disasters. For the latter, Congress rescinded $75 million from a fund already cut a year ago that has to serve tens of millions of dollars of special projects due to appropriations language. This means that by nominally serving federal workers now, DOL would be able to cover fewer needs created by the secondary layoffs later—or employment needs caused by the fires and hurricanes that usually hit in the second half of the calendar year.

Cool.

What would effective ‘treatment’ to these layoffs look like?

These layoffs stem from similar causes but are likely to become widespread, affecting many employers and many different job types. Some federal roles—and the private-sector jobs that support them—are tailored to a version of the federal government that the Administration seeks to eliminate. That means we need retraining, and the main workforce tools we have now aren’t really built to provide the level and length of support needed. Plus, there is a risk of fraud without verification that federal cuts led to someone losing a particular job.

This all means we need Congress to act, and Congress works best in workforce if it has an existing model. That is why I would suggest responding to the effects of these cuts with a program based on the late Trade Adjustment Assistance Program.

TAA provided retraining and some relocation costs to workers who lost their jobs due to a company offshoring their positions or another eligible type of trade activity, as determined by DOL investigators. TAA also provided a wage subsidy to older workers who took jobs at lower pay. This is a lurking issue that S.J. and I discussed. Older workers tend to have a harder time finding work anyway because of age discrimination, and many older feds may have non-negotiable life circumstances and deep roots that make them less able to move or take significantly lower-paying work.

TAA has one of the best reputations of any workforce program I know. Seventy-five percent of people who participated in TAA found a new job within six months. Over a ten-year period, laid-off workers who participated in TAA made $50,000 more than those who didn’t.

Of course, Congress let TAA expire in 2022 because of Republican opposition.⁵ Theoretically, parts of the investigation process could be altered to improve speed and allow investigations to be handled mostly by contractors, which probably would be needed to avoid hiring (or retaining) federal staff, a likely necessary condition for swaying Republicans in Congress and Administration officials.

Which speaks to the big downside of this idea: creating a program like this requires that someone in charge sees all this widespread new joblessness as a big problem.

Let’s see what happens on Friday.

Card subject to change.

This week’s JOBS THAT WORK delay is brought to you by two velociraptors small children who tested multiple defenses as part of a plot to one day overthrow us ignored the laws of man and human biology to resist sleep. I’m traveling quite a bit over the next month, but hoping to stick to early-morning deliveries for the most part.

I may have something short on Friday afternoon if the jobs report is really… interesting and there is some action by the Administration. In the meantime, assume normal scheduling. Ration “jobs” and whether they “work” accordingly.

FRIDAY: This week’s grants listings for paid subscribers, plus some thoughts on how states and grantees should react to the Administration’s continued move away from good jobs.

NEXT TUESDAY: We’re getting rid of equity. Got it! The problem with that? You kind of need equity to do good workforce development. Crap!

1. This, by the way, undersells the skills of the people working at your DMV window.

2. While editing this edition, I recalled hearing in my old job that state and local governments often felt unable to meet the wage component of DOL’s Good Jobs Principles. In some places, state legislators set wage ceilings, and it was a non-starter to raise the issue of pay raises for certain employee classes with those legislators.

The Good Jobs Principles’ floor for pay was “a stable and predictable living wage.”

Yikes.

3. The evidence says it’s not unfair to say that the whole of the Administration’s current jobs policy is more unemployment. That may evolve through attempts to persuade companies to “reshore” overseas jobs in the United States to avoid tariffs, but the “job creation” side of the Administration’s agenda is theoretical, based on what I have seen and heard. Happy to correct the record, though. Email nick@jobsthat.work.

4. I imagine some helpful person could read this and say “Well, chaos is the point” or “Well, it’s meant to be retribution.” And if true, well, it’s a really dumb motivation. You can barge into some of your tenants’ apartments and whack their kitchen sinks with sledgehammers because you think A Sink Kilt Yer Paw, but eventually they want water from a tap. So even if they’re sympathetic, they’re probably going to ask if sledgehammering is the best approach for dealing with your complex feelings toward sinks.

5. Per the story linked above, Republicans disliked that TAA cost up to $1 billion dollars to run. To put this into context, $1 billion is about 1/45th of the value of Twitter in last week’s sale from its emotional purchaser to another company owned by its emotional purchaser. Or 1/14th of what SoftBank lost on WeWork.

References I picked for no reason at all.