Job Loss Numbers Mount As Workforce Reduction Continues
Since Donald Trump’s inauguration on January 20, 2025, the U.S. has undergone a purge of federal agencies and jobs. The scope of workforce reduction is evolving, and its full impact will take months–even years–to assess. But we know it will be significant.
This post will update periodically as we try to assess the potential impace to DC residents and the Washington DC real estate market.
Unemployment
The largest increases in initial claims for the week ending March 15 were in Michigan (+2,842), Mississippi (+1,775), Texas (+1,458), Nebraska (+395), and Missouri (+206).
The highest insured unemployment rates in the week ending March 8 were in Rhode Island (2.9), New Jersey (2.8), California (2.4), Massachusetts (2.4), Minnesota (2.4), Illinois (2.3), Washington (2.3), Montana (2.1), District of Columbia (2.0), Connecticut (1.9), New York (1.9), and Pennsylvania (1.9).
Updates
Constantly shifting numbers due to additional terminations, worker recalls, agency deletion and reinstatement errors, and other variables resulting from a haphazard, uninformed and, in some cases, illegal procedure, as well as lack of transparency and accuracy by the Trump administration, we are umable to continue to track the daily and weekly federal workforce changes. Please refer to the ongoing tabulation by CNN.
It Started WIth ‘Probationary’ Employees
NPR reports the number of probationary employees–those with two years or less on the job–as numbering over half a million.
- According to the most recent available data from March 2024, about 508,000 federal employees were in probationary status with 0-2 years of service.
- Probationary periods vary by federal agency but typically last between one and two years
- Government data shows approximately 220,000 federal employees had less than a year of service as of March 2024, and an additional 288,000 had been employed for one to two years at that time.
- Reuters reports that about 280,000 civilian government workers were hired less than two years ago with most still on probation
Employees who passed the two-year probationary period are no longer considered probationary and have gained full civil service protections.
The “Fork In The Road” buyout offer has some exemptions, including:
- Military armed forces personnel
- U.S. Postal Service employees
- Immigration enforcement and national security employees
- Workers related to public safety
- Other exemptions as identified by agency heads
Some employees may be ineligible for the Voluntary Separation Incentive Payment (VSIP) if they:
- Are reemployed annuitants
- Have a disability making them eligible for disability retirement
- Have received a decision notice of involuntary separation for misconduct or poor performance
- Previously received any VSIP from the Federal Government
- Received certain benefits or incentives in the past 12-36 months
Detailed data on the percentage of the workforce that passed the two-year mark since March 2024, and the pervcentage with exempted status is not currently available. It’s not possible, therefore, to determine an accurate total of the newly unemployed.
Unemployment data for February is due to be released on Friday, March 7, 2025.
Buyouts
“Fork in the Road” offers in the form of an email from the U.S. Office of Personnel Management (OPM) were sent to most federal employees, numbering approximately 2.3M across the U.S.
Workers were given a “choice” to resign or risk being laid off.
Currently, about 77,000 workers have accepted the buyout. The number continues to rise now that a federal judge has ended an order freezing the buyouts due to union involvment in the complaint that initiated the buyout stay order.
How Could The Sudden Spike In Unemployment Affect DC’s Economy?
March 29 2025 Update
The budget bill (full year CR) enacted earlier this month to fund the federal government for the remainder of fiscal year 2025 omitted previously approval for the District of Columbia’s fiscal year 2025 budget, effectively forcing the city to cut $1 billion by limiting how much it can spend of its own locally-raised funds.
Cutting funding levels for local funds does not save the federal government anything since the budget was funded with local revenue. For the past 20 years, Congress has allowed D.C. to continue spending its own local revenue when it passes bills to avoid a government shutdown. This year was different.
After endorsing the budget bill earlier this month, on March 28th, President Trump instructed the House of Representatives to pass a Senate-originated “fix” that remedies the omission.
Even if the budget is restored, the District faces many challeges in 2025.
Approxiately 2.4 million civilians make up the federal workforce, not including military personnel and postal workers. Roughly 20% of them–480,000–live in the District of Columbia, Maryland and northern Virginia.
Data as of March 2024 shows 43.3% of employed civilian workers in Washington, DC work for the federal government, totaling 162,144 federal employees.
Large-scale unemployment and employment uncertainty n the District of Columbia could have significant and far-reaching effects:
Potential Economic Impact
- Increased long-term UE rates
- Reduced earnings potential for affected workers, with negative effects persisting even after re-employment
- Broader economic slowdown due to reduced consumer spending from displaced federal workers
- Strain on local economic resources and social services
- Strain on workforce development programs and educational institutions as they attempt to retrain and reintegrate unemployed workers
Social Consequences
- Increased risk of housing instability
- Potential increase in crime rates
- Potential impact to credit worthiness and increases in debt default
- Disruption to families
- Loss of work-related social connections
Long-term Career Effects
- Reduced job quality and lower wages for affected workers, potentially long-lasting
- Barriers to future employment due to prolonged periods out of the workforce
- Decreased likelihood of homeownership
Who Else Is Impacted By The Workforce Reduction?
Around 80% of federal workers reside outside the Washington DC region, so workers across the nation will be affected:
OPM Data | September 2017
| Geographic Area | All Agencies* | Percent of Total | Department of Defense | Annuitants | Annuitants + Employees |
|---|---|---|---|---|---|
| Total, All Areas** | 1,869,986 | 100.00% | 676,840 | 2,579,861 | 4,449,847 |
| Unspecified | 1,124 | 0.06% | 270 | 10 | 1,134 |
| Outside of the United States and US Territories | 21,393 | 1.14% | 17,338 | 22,551 | 43,944 |
| United States*** | 1,847,469 | 98.80% | 659,232 | 2,557,300 | 4,404,769 |
| District of Columbia | 141,367 | 7.56% | 11,693 | 36,575 | 177,942 |
| Fifty States | 1,693,382 | 90.56% | 644,218 | 2,511,207 | 4,204,589 |
| US Territories | 12,720 | 0.68% | 3,321 | 9,518 | 22,238 |
| Washington, DC-MD-VA-WV, CBSA | 282,666 | 15.12% | 61,002 | 306,760 | 589,426 |
| District of Columbia | 141,367 | 7.56% | 11,693 | 36,575 | 177,942 |
| Maryland counties | 67,583 | 3.61% | 13,903 | 136,077 | 203,660 |
| Virginia counties and independent cities | 72,549 | 3.88% | 35,403 | 118,508 | 191,057 |
| West Virginia counties | 1,167 | 0.06% | 3 | 15,600 | 16,767 |
| Alabama | 37,386 | 2.00% | 22,056 | 57,897 | 95,283 |
| Alaska | 10,398 | 0.56% | 4,483 | 8,192 | 18,590 |
| Arizona | 38,087 | 2.04% | 8,212 | 57,006 | 95,093 |
| Arkansas | 12,557 | 0.67% | 3,124 | 24,432 | 36,989 |
| California | 152,466 | 8.15% | 57,795 | 209,915 | 362,381 |
| Colorado | 36,848 | 1.97% | 10,596 | 50,869 | 87,717 |
| Connecticut | 7,998 | 0.43% | 2,298 | 14,667 | 22,665 |
| Delaware | 3,039 | 0.16% | 1,250 | 10,823 | 13,862 |
| Florida | 89,504 | 4.79% | 29,793 | 178,212 | 267,716 |
| Georgia | 71,739 | 3.84% | 31,203 | 87,281 | 159,020 |
| Hawaii | 23,453 | 1.25% | 18,135 | 21,975 | 45,428 |
| Idaho | 7,731 | 0.41% | 1,253 | 15,704 | 23,435 |
| Illinois | 44,760 | 2.39% | 11,961 | 68,828 | 113,588 |
| Indiana | 22,610 | 1.21% | 10,397 | 37,010 | 59,620 |
| Iowa | 8,042 | 0.43% | 1,313 | 21,002 | 29,044 |
| Kansas | 15,672 | 0.84% | 6,237 | 24,486 | 40,158 |
| Kentucky | 22,181 | 1.19% | 8,870 | 33,381 | 55,562 |
| Louisiana | 19,537 | 1.04% | 5,579 | 27,615 | 47,152 |
| Maine | 11,285 | 0.60% | 7,726 | 13,957 | 25,242 |
| Maryland | 120,705 | 6.45% | 42,469 | 162,053 | 282,758 |
| Massachusettes | 25,063 | 1.34% | 5,896 | 41,292 | 66,355 |
| Michigan | 27,405 | 1.47% | 8,565 | 45,727 | 73,132 |
| Minnesota | 16,795 | 0.90% | 2,021 | 30,007 | 46,802 |
| Mississippi | 17,295 | 0.92% | 8,122 | 25,533 | 42,828 |
| Missouri | 33,377 | 1.78% | 6,741 | 53,717 | 87,094 |
| Montana | 8,589 | 0.46% | 1,184 | 13,670 | 22,259 |
| Nebraska | 10,468 | 0.56% | 3,835 | 13,399 | 23,867 |
| Nevada | 12,186 | 0.65% | 2,250 | 24,828 | 37,014 |
| New Hampshire | 4,331 | 0.23% | 854 | 12,820 | 17,151 |
| New Jersey | 24,758 | 1.32% | 9,718 | 51,992 | 76,750 |
| New Mexico | 21,954 | 1.17% | 6,094 | 27,835 | 49,789 |
| New York | 60,727 | 3.25% | 9,714 | 90,647 | 151,374 |
| North Carolina | 42,772 | 2.29% | 19,312 | 78,061 | 120,833 |
| North Dakota | 5,460 | 0.29% | 1,505 | 6,538 | 11,998 |
| Ohio | 49,450 | 2.64% | 24,423 | 74,556 | 124,006 |
| Oklahoma | 37,486 | 2.00% | 22,886 | 46,560 | 84,046 |
| Oregon | 17,252 | 0.92% | 2,596 | 34,293 | 51,545 |
| Pennsylvania | 62,366 | 3.34% | 22,734 | 107,546 | 169,912 |
| Rhode Island | 6,864 | 0.37% | 4,311 | 7,590 | 14,454 |
| South Carolina | 21,050 | 1.13% | 9,335 | 45,875 | 66,925 |
| South Dakota | 7,547 | 0.40% | 1,193 | 10,570 | 18,117 |
| Tennesse | 25,099 | 1.34% | 5,228 | 47,883 | 72,982 |
| Texas | 132,952 | 7.11% | 44,404 | 172,744 | 305,696 |
| Utah | 26,109 | 1.40% | 14,611 | 34,155 | 60,264 |
| Vermont | 4,845 | 0.26% | 506 | 4,588 | 9,433 |
| Virginia | 144,295 | 7.72% | 88,915 | 162,892 | 307,187 |
| Washington | 53,211 | 2.85% | 27,918 | 68,707 | 121,918 |
| West Virginia | 18,656 | 1.00% | 1,488 | 18,373 | 37,029 |
| Wisconsin | 14,045 | 0.75% | 2,155 | 27,516 | 41,561 |
| Wyoming | 4,977 | 0.27% | 954 | 5,988 | 10,965 |
* Includes all Non-Postal Executive Branch Agencies as well as the Government Printing Office (LP), the U.S. Tax Court (LT), the Medicare Payment Advisory Commission (ZL), the U.S. Commision on International Religious Freedom (ZP), the U.S. China Economic & Security Review Comision (ZS), the Dwight D. Eisenhower Memorial Commission (ZU), and the Federal Bureau of Investigation (DJ02).
** Includes unspecified geographic location
*** Includes U. S. territories
NA = Not Applicable
What Are The Potential Ripple Effects?
The workforce reduction is expected to have profound ripple effects across government contractors, related industries, and regional economies:
DCMA Economic Effects
For every federal job lost, an estimated 2-3 additional jobs in the regional economy are affected due to reduced spending by federal employees and contractors.
With 15,853 estimated federal job losses in the region (based on est. calculations provided in this post), this could result in a total impact of 31,706 to 47,559 jobs lost across the local economy.
Strain on Local Businesses
- Businesses that rely on spending by federal employees (e.g. restaurants, retail stores, and service providers) may see reduced revenue and could be forced to cut staff or close.
- Real estate markets in the region could soften as displaced workers leave the area or reduce spending on housing.
Increased Competition for Jobs
Displaced federal workers flooding the private job market could increase competition for positions, potentially driving down wages for similar roles.
Impact on Government Contractors
There are likely to be disruptions to contract performance:
- Federal agencies losing employees may struggle to oversee and coordinate contracts, leading to delays, inefficiencies, and backlogs
- Contractors may face challenges meeting obligations due to reduced federal oversight or delayed approvals
Budget Uncertainty
Agencies may shift priorities or cut funding for contracts, leading to renegotiations, modifications, or cancellations.
Classied Project Delays
Contractors reliant on classified projects could face delays if a significant number of federal security clearance holders resign or are termnated.
Job Losses in Contracting Firms
Thousands of private-sector jobs tied to federal contracts have already been lost due to funding freezes and workforce reductions, and more are expected.
Contractors that depend heavily on federal spending are likely to downsize their own workforce if contracts are reduced or terminated.
National Economic Impact
Contracting Industry Nationwide
The $750 billion annual federal contracting market may see shifts in spending priorities rather than an outright reduction, but delays in contract awards and funding reallocations could create temporary disruptions.
Ripple Effect Across Industries
Industries indirectly tied to government operations—such as technology firms, defense contractors (e.g., Lockheed Martin, BAE, RTX, Boeing, Leidos, Northrop Grumman, L3Harris and more), and logistics providers may experience revenue declines if agencies scale back operations or delay projects. This could result in layoffs and terminations within those companies.
Social Services Strain | DC, State And Local
Displaced workers may rely more heavily on unemployment benefits or public assistance programs, increasing pressure on DC, state and local resources.
Potential Upsides
As the impact of workforce reduction hits the affected agencies, they may outsource work that had been performed by terminated federa employees, especially in areas like admin support and technology.
Contractors may recruit experienced former federal employees to take advantage of their training and operational insights in order to strengthen their bids for future contracts.
Contracting would result in a reversal of some of the gains from workforce reduction.
How Might The DC Real Estate Market React?
The impact on the Washington DC real estate market could be significant:
Housing Market Effects
- Increased housing inventory as federal workers leave the area or sell their homes due to financial hardship
- Potential softening of property prices, especially in areas with high concentrations of federal employees
- Elongated selling cycles (increased DOM) for homes
- Possible decrease in housing demand
- Potential decrease in property tax revenue
Market Uncertainty
- Wait-and-see approach adopted by consumers and investors, leading to hesitancy in the market
- Varied impact across different submarkets, with areas heavily tied to federal employment likely to be more affected
While the influx of homes from departing federal workers may lead to softening prices in specific areas, the overall market impact will depend on the scale of workforce reductions, length of time vacancies are sustained, and the effectiveness of return-to-office mandates.
What’s The Best Course Of Action For DC Homeowners Who Lost Jobs?
For District of Columbia homeowners whose jobs have been impacted by the recent federal workforce reduction, the best courses of action right now include:
Aggressively Search For A New Position
The best case scenario is replacing your government job with a better private sector job. Critically assess the current job market, put out feelers to friends and contacts, reach out to employment services specializing in government workers.
Assess your financial situation
Evaluate your savings, retirement and income sources, and immediate financial needs.
Contact a mortgage servicer: Discuss potential options for mortgage relief or modification. Be sure to have your current mortgage documents handy for this conversation.
Explore your lending options immediately
- Consider refinancing: Homeowners who have lost their jobs can still potentially qualify for a refinance through several options:
- FHA Streamline Refinance: This program is available for homeowners with existing FHA loans and doesn’t require income verification or a home appraisal. It’s designed to help borrowers reduce their monthly payments by lowering interest rates or extending the loan term.
- VA Streamline Refinance (IRRRL): For homeowners with VA-backed loans, this option doesn’t require income verification, appraisal, or bank account balance checks.
- Asset Depletion Mortgage: Qualified borrowers can refinance using their liquid assets, such as savings and investments, as income. This option is suitable for those with significant assets but no traditional job.
- Fannie Mae Refi Now and Freddie Mac Refi Possible: These programs are designed for low- to moderate-income homeowners with Fannie Mae or Freddie Mac-backed mortgages. They offer a minimum 0.5% interest rate reduction and may cover appraisal fees.
- Loan Modification: While not a traditional refinance, loan modification programs like the Fannie Mae and Freddie Mac Flex Modification can help unemployed borrowers make their loan payments more manageable. It’s crucial for homeowners to act quickly and communicate with their loan servicer as soon as possible after job loss. Many lenders offer assistance programs, such as forbearance, which can provide temporary relief while the homeowner searches for new employment.
- Get financial counseling: Contact community-based organizations (CBOs) for guidance on available resources and financial planning.
- Stay informed: Monitor for any new assistance programs that may be introduced in response to the workforce reduction.
- Prepare for a potential home sale: If retaining the home seems unfeasible and/or you’re likely to relocate, act as quickly to research the current DC real estate market and comtact us for help.
Again—it’s important to act quickly and proactively to explore all available options and maintain financial stability during this challenging period.
AUTHOR
Skilled Realtor® Susan Isaacs is a 20+ year residential real estate and new construction veteran with expertise in buyer and seller representation, investor representation, new homes, relocation and exchanges.
Licensed in the District of Columbia and Virginia since 2008.
Susan Isaacs, Realtor®
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Disclaimer: This post is offered for informational purposes only and should not be construed as financial or legal advice. Home buyers and sellers must always perform their won due diligence and seek counsel from licensed professionals such as CPAs and attorneys when making choices relating to a real estate transaction. We do not endorse individual service providers and citations should not be considered endorsements.