The early impact of job cuts from Elon Musk’s Department of Government Efficiency (DOGE) is appearing in some labor market numbers.
On Thursday, data from job placement firm Challenger, Gray & Christmas showed job cuts soared in February to 172,017, their highest monthly level since July 2020. This marked a 245% increase in layoff announcements from the month prior. The firm noted cuts from DOGE and «retail woes» drove the increase in job eliminations.
«With the impact of the Department of Government Efficiency [DOGE] actions, as well as canceled Government contracts, fear of trade wars, and bankruptcies, job cuts soared in February,» said Andrew Challenger, senior vice president and workplace expert for Challenger, Gray & Christmas.
Separate data from the Department of Labor, also released Thursday, showed 1,510 weekly unemployment claims were filed in the District of Columbia in the week ending March 1, down from 1,893 but still significantly elevated compared to data over the past year.
In a sign unemployed workers are taking longer to find a new job, continuing claims for unemployment benefits remain near a three-year high. Workers filed 1.89 million claims during the week, up from the 1.85 million the week prior.
With the hiring rate hovering near its lowest level in a decade, economists have reasoned the steady, elevated level of continuing unemployment benefit claims reflects a labor market in which those without a job are struggling to find a new one.
As Federal Reserve chair Jerome Powell put it in a January press conference, «If you have a job, it’s all good,» but «it’s a low hiring environment.»
This raises the question of whether massive layoffs of government employees could spike the national unemployment rate.
In the long run, some economists argue it could push unemployment higher. RBC Capital Markets senior US economist Michael Reid wrote in a note to clients that in a «high-layoff scenario,» where about 550,000 jobs are cut, the unemployment rate could rise to 4.3% from its current 4% level. In a «low-layoff scenario,» where about 175,000 jobs are cut, the unemployment would rise just one-tenth of a percentage point to 4.1%. Reid’s «most likely» scenario sees about 200,000 job cuts pushing the unemployment rate to 4.1%.
Still, the timing on any impact isn’t expected to be immediate — and likely won’t impact the February jobs report due out for release on Friday.
«Don’t expect DOGE cuts to show up in the payroll data just yet,» Reid wrote. «The timing matters and we still don’t have a clear indication the probation layoffs are final.»
