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The federal government is the single largest employer in the U.S. As such, it employs 12% of all government employees. State-level government employees make up 24%, while local governments make up a whopping 63% of government workers.
GREATER POLITICAL THAN ECONOMIC IMPACTS
Although the national headlines are consumed with the ongoing attempts to trim the federal workforce, the numbers suggest that the impact on savings will be minimal. Out of the entire government workforce, federal workers only account for 12%, or 1.87% (just over 3 million people) of the entire civilian workforce. Therefore, the loss of a percentage of these workers has a significantly greater political than economic impact.
WHERE ARE THESE FEDERAL WORKERS?
Although we hear a constant refrain of “Washington, Washington,” less than one-fifth of federal workers reside in the District of Columbia or adjacent states. The majority of them are our neighbors.
Initial goals, as indicated by DOGE (Department of Government Efficiency), were reported to be a reduction in the federal workforce by 75%, as well as cutting $6.1 trillion from the federal budget. It seems highly unlikely that a reduction of this magnitude will materialize. Entrenched bureaucracy, lobbying, and the vast military-industrial complex deeply embedded in all aspects of the economy make draconian cuts unlikely.
OPPORTUNITY FOR EMPLOYERS
However, with the writing on the wall, it’s clear that many federal government employees will be looking for work, which presents an opportunity for employers. Lauren Milligan, a career coach, is quoted in a recent Forbes article, “Corporate and private-sector employers have an opportunity to tap into highly skilled talent with deep regulatory, compliance, and administrative expertise. The challenge lies in bridging the gap between federal experience and private-sector expectations — identifying transferrable skills, capitulating to corporate priorities and messaging, modernizing technical skills (that are often behind the curve), and adapting to a vastly different work culture”.
Many of the soon-to-be-unemployed government workers are working in knowledge-based jobs. A knowledge worker refers specifically to someone whose primary job function is to apply their expertise and knowledge to solve complex problems, analyze information, and make decisions.
If you are in a regulated industry, specifically a heavily regulated one, the availability of relevant talent could be a windfall. The insider knowledge and connections they bring to your organization can be very valuable.
CHALLENGES FOR FEDERAL WORKERS
Ms. Milligan also pointed out that… “Many displaced federal employees are now navigating a job market that is quite different from government hiring. They’ve had to revise their resumes on the fly, dust off their networking and interviewing skills, and overhaul their short- and long-term career goals. While these candidates bring valuable transferable skills, they are entering what was already a highly competitive employment market”.
The most significant change in the workforce over the last decade has been the rapid rise of the Freelance Workforce. Since 2014, an average of 1 million more people each year have done some type of freelance work. This environment will be new to many of the government employees who are expected to be looking for work.
Justin Schnitzer, a federal employment attorney, adds that “Given December’s lackluster jobs report, the roughly 77,000 federal workers who took the buyout may have a hard time finding new jobs. For those already in the private sector, the addition of these workers, who are typically highly educated, adds extra competition.”
HOW COULD THIS IMPACT MY SMALL BUSINESS?
As noted above, bringing on board a federal worker with knowledge and connections related to your industry could be a great addition to your team.
However, the severance sword cuts both ways. The resulting government brain drain could have a negative impact on your business as well. Michelle Devitt, a labor law attorney and partner at Willig Williams Davidson, warns, “Early indications are that a lot of people who took the buyouts were people later in their career taking early retirements, which means they may not be headed back into the job market. But they are also the most experienced, so these abrupt departures will mean a loss of institutional knowledge and expertise across agencies that would otherwise have been passed on.”
Ms. Devitt adds, “This brain drain from the federal workforce is likely to impact the quality and speed of federal services Americans are used to enjoying,” Devitt cautioned. “These agencies are already limiting services and extending wait times for resolution of workplace disputes and remedies. Further downsizing the federal workforce only worsens those impacts.”
Laurence Ales, the senior associate dean for education and a professor of economics at Carnegie Mellon University’s Tepper School of Business, attempted to address the impact of a downsized federal workforce on the nation’s economy. He concludes, “Beyond the short-term impact due to changes in spending, longer effects are hard to predict. Here, we need to acknowledge the critical work that many federal employees provide. Broad reductions in the federal workforce could lead to significant, albeit uncertain, economic drawbacks,”
HOW CAN ASN HELP?
We are navigating uncharted waters. The impacts of the new administration in Washington are unknown. Shifting priorities and re-alignments within and without government make it extremely difficult to chart a new course.
Our professionals at ASN are rising to the challenge. We are constantly updating our skills and tracking economic trends and workplace changes to provide the services and counsel you need to stay on track and succeed. If you would like to discuss any of the topics raised here today, just give a call.
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DOGE AND YOUR BUSINESS
