DOGE Firings: The Cuts That Cut Everyone

More unemployment, higher business costs, and struggling local economies—this mess belongs to all of us.

The Trump administration’s mass federal layoffs were sold as a brilliant cost-cutting measure, a way to make the government "efficient" under the watchful eye of Elon Musk’s Department of Government Efficiency (DOGE). But the reality? This isn’t just a disaster for the thousands of federal employees suddenly without jobs—it’s a crisis for everyone.

The effects of these reckless firings won’t be contained to Washington, D.C. They will flood the job market with highly qualified professionals, drive unemployment rates up, raise business costs, and devastate local economies that depend on federal salaries. If you have a job, run a business, or just like living in a stable economy, congratulations—this mess is now your problem too.

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More Job Seekers, Fewer Jobs: A Brutal Market for Everyone

For anyone looking for a job, the timing of these layoffs couldn’t be worse. The U.S. unemployment rate was already at 4.0%, and now, tens of thousands of experienced federal workers are about to flood the private sector looking for work. They aren’t just competing for high-level government consulting gigs. These are professionals with degrees, experience, and security clearances, and they’ll be applying for everything, from private industry jobs to state and local government roles.

That means fewer jobs for everyone else. New graduates will now be fighting against former NASA engineers and cybersecurity specialists. Mid-career professionals will be going up against former high-ranking agency officials willing to take pay cuts just to stay employed. Those already struggling to find work? They just saw their chances shrink dramatically.

And it gets worse. Many laid-off federal workers won’t be able to find jobs immediately. Some specialized roles have no equivalent in the private sector, while others will take months or years to transition into new industries. That means higher unemployment, longer job searches, and more economic instability.

Higher Unemployment? Get Ready for Higher Business Costs

With thousands of newly unemployed workers filing for unemployment benefits, state unemployment funds will take a direct hit. And when those funds start running low, states raise unemployment insurance (UI) taxes on businesses to compensate.

Yes, you read that right. Even if you didn’t fire anyone, your company might still be on the hook for higher unemployment taxes because of DOGE’s reckless cuts. States with high concentrations of federal workers, like Virginia, Maryland, California, Texas, and Florida, are expected to be hit the hardest. However, more states could feel the ripple effects as federal workers relocate in search of jobs.

This isn’t just bad news for corporations. Already struggling with inflation and post-pandemic economic shifts, small businesses will be forced to shoulder additional tax burdens. Some may stop hiring, while others may lay off employees just to compensate for the increased costs. So much for economic efficiency.

Struggling Local Economies: The Fallout for Businesses and Communities

In cities with large federal workforces, entire local economies are built around the salaries of government employees. From coffee shops and dry cleaners to real estate markets, these businesses depend on federal workers to survive. Now, those businesses are about to experience a sudden, devastating loss of customers.

Take Washington, D.C., where one in every three jobs is tied to the federal government. Thousands of laid-off workers mean fewer people buying lunch downtown, fewer people shopping, and fewer people signing leases. Real estate markets in government-heavy areas like Northern Virginia and suburban Maryland are already bracing for a downturn as potential homebuyers lose financial stability.

It’s not just D.C. that’s in trouble. Cities like Huntsville, Alabama (home to NASA and the Army’s Redstone Arsenal) and Boulder, Colorado (home to major federal research labs) rely heavily on federal salaries. Many of these areas have no industry strong enough to absorb this many layoffs, meaning businesses will shut down, and even more jobs will be lost. Hope you aren’t trying to start a business or sell a home.

Cuts That Cost More in the Long Run

Let’s not forget the long-term damage. Some agencies being gutted are responsible for economic growth and stability.

• The IRS layoffs mean fewer auditors and enforcement agents, which means less tax revenue collected. Cutting enforcement doesn't eliminate tax fraud; it just makes it easier to get away with. The short-term "savings" of firing IRS employees could cost the federal government billions in lost revenue.

• NASA and research agency cuts mean fewer technological innovations, fewer grants to private companies, and a slowdown in industries that rely on government-backed scientific progress. But hey, SpaceX will get more contracts.

• Housing and Urban Development (HUD) staff reductions could slow down affordable housing projects, raising rent costs in cities that are already unaffordable for many Americans.

The administration’s goal was to cut government spending. Instead, it has shifted the financial burden onto businesses, local economies, and taxpayers, creating an even bigger economic mess than the one they claimed to fix.

This Isn’t About “Big Government.” It’s About Economic Reality.

Some people will cheer these cuts because they think they’re about reducing "big government." That’s a great talking point until you realize the consequences. These layoffs weren’t targeted reductions of waste. They were haphazard, ideologically driven cuts that are now destabilizing job markets, raising business costs, and hurting communities nationwide.

These layoffs won’t save you money. They’ll make your job search harder, your business more expensive to run, and your local economy weaker. And the administration? It has no plan to fix any of it.

The damage is already done. Now we all have to pay for it.

Are you a former federal employee impacted by these layoffs? We’d love to talk to you!

Bibliography:

• Recession Watch: Trump Layoffs, Other Acts, And The Economic Forecast https://www.forbes.com/sites/billconerly/2025/02/19/recession-watch-trump-layoffs-other-acts-and-the-economic-forecast/

• Federal workers in Boulder brace for potential mass layoffs https://boulderreportinglab.org/2025/02/18/federal-workers-in-boulder-face-uncertainty-as-mass-layoffs-ripple-through-government-agencies/

• How Mass Layoffs Of Federal Employees Could Affect The Economy https://www.investopedia.com/how-mass-layoffs-of-federal-employees-could-affect-the-economy-trump-musk-doge-11681896

• ‘Chaos and confusion’ as Trump’s mass firings impact the basic functions of government | PBS News https://www.pbs.org/newshour/show/chaos-and-confusion-as-trumps-mass-firings-impact-the-basic-functions-of-government

• The Federal Workforce in Transition https://www.shrm.org/executive-network/insights/federal-workforce-in-transition

• There is help for probationary employees who were terminated https://federalnewsnetwork.com/hiring-retention/2025/02/there-is-help-for-probationary-employees-who-were-terminated/

• How federal layoffs set the stage for greater privatization and automation of the US government https://www.brookings.edu/articles/how-federal-layoffs-set-the-stage-for-greater-privatization-and-automation-of-the-u-s-government/

• The cost of layoffs in Unemployment Insurance taxes : Monthly Labor Review: U.S. Bureau of Labor Statistics https://www.bls.gov/opub/mlr/2020/article/the-cost-of-layoffs-in-ui-taxes.htm