President Trump’s widespread firing of federal workers threatens to destabilize a Washington economy closely intertwined with the fate of government employees.
More than 80 percent of the nation’s federal employees are located outside Washington, but the concentration of workers in the capital means President Trump and Elon Musk's plans are sure to have an outsize impact locally.
The D.C. government dropped its projection for how much the government will take in annually over the next five years, lowering its estimate by roughly $342 million because of a forecast for “sharp declines” in the federal workforce.
Internal data from Bank of America shows credit card spending in Washington has dipped since February, something the bank concluded was “likely due to the impact of DOGE cuts.”
Unemployment filings also jumped for D.C., Maryland and Virginia across both February and March.
“When people either lose jobs, or when they even just fear losing a job, they tend to cut back on spending. It’s not a time to buy a new car, or a new house, or even go on vacation or go to a restaurant. So people might be trying to beef up their emergency funds that can have a pretty significant effect on the local businesses, which then might lay off workers,” said Julia Pollak, who is now the chief economist at the U.S. Department of Labor but who spoke to The Hill while working as the chief economist at ZipRecruiter.
“So that's why even a small increase in the unemployment rate can snowball quite quickly.”
Since Trump took office, agencies have fired thousands of federal workers.
But the full force of the planned layoffs has yet to be felt.
Agencies this month are scheduled to provide plans for widespread reduction in force, and the Trump administration could begin layoffs 30 days after that.
“The problem is that what is happening is very, very fast, very, very sudden, very unanticipated, and the scale is unclear. …Some government employees who have left or being forced out, are going to find jobs in the private sector pretty quickly, right? Some aren't,” said Martha Gimbel, executive director and co-founder of the Budget Lab at Yale University.
Gimbel said some workers fired by Musk have quickly found work — noting agencies like the U.S. Department of Agriculture struggled to rehire some of its employees.
“This is not going to apply to everyone, right? So, for instance, people in development, I think it's going to be harder to land because the entire sector is getting whacked at the same time.”
Forecasting from Oxford Economics estimated that as many as 200,000 federal workers could lose their jobs, including nearly 34,000 in D.C.
Nationally, Oxford estimates 35 percent of those workers will move to the private sector, 15 percent will get jobs in state or local government, 5 percent will become self-employed, and 10 percent will retire. That leaves 35 percent who they project will remain unemployed.
“It really just depends on what skills you brought to the federal job in the first place. Is it accounting skills? Is it administrative assistant skills? But it is hard to wrap your head around just how so many employees could transfer into other roles, in other places, but eventually many of them do,” said Barbara Denham, a senior economist at Oxford Economics.
Gimbel said workers often find employment — though she said that work may not be professionally ...
