A smaller federal government brings challenges and opportunities.
Efforts by Elon Musk and President Donald Trump to downsize the 3 million member federal workforce offers benefits to companies and organizations, while posing new challenges for government employees who want to transition to the private sector.
An Opportunity For Employers
“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,” Lauren Milligan, a career coach, said in an email.
Challenges For Former Workers
Some of the newly unemployed federal workers may decide to enter the growing and vibrant freelance workforce which includes an estimated 64 millions workers.
“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,” Milligan pointed out.
The current job market will pose additional hurdles for former government workers.
“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. Justin Schnitzer, a federal employment attorney, said in an email.
Federal Government Brain Drain
The voluntary or forced departures of tens of thousands of federal workers will likely have an impact on government agencies.
“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,” Michelle Devitt, a labor law attorney and partner at Willig Williams Davidson, said in an email.
The Effect Across Public Services
Americans across the country will likely feel the effect of a reduced federal government on the public services they are accustomed to, including labor and workplace safety protections, emergency services, health services and so much more.
“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 worsen those impacts.”
Putting Things In Perspective
The federal government employs 3 million workers. While the size is significant, it has been roughly flat since the 1970s, and has been a smaller part of the nation’s workforce over time, Laurence Ales, the senior associate dean for education and a professor of economics at Carnegie Mellon University’s Tepper School of Business, said in an email.
Market Headwinds
Government spending has a small put positive multiplier effect on the economy, according to Ales. But the cutback in the workforce and corresponding reduction in government spending “will have introduced contractionary headwinds to the economy. These forces will become stronger as the labor market is by itself already losing steam,” Ales noted.
Nationwide Impact
Since most federal workers live outside of Washington, their departure from the workforce will affect the communities where they reside.
“85% of federal employees live outside of the D.C. metropolitan area. These employees live all across the country. These steady and generally well-paid jobs provide a boon to local economies. Significantly cutting back on these positions will have a negative effect on local economies across the U.S.,” J. Thomas Spiggle, a labor and employment lawyer at Spiggle Law Firm, said in an email.
Economic Concerns
The impact of a downsized federal workforce could lead to broader problems for the nation’s economy.
“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,” Carnegie Mellon University’s Ales concluded.
The unexpected efforts to downsize the federal government and the tens of thousands of jobs it represents may be a dark cloud for the people who suddenly find themselves out of work, but it is a potential gold mine for companies looking to take advantage of the expertise and skills of these federal workers.
