Efficiency or Economic Uncertainty?
- Andrew Schneider
- Mar 25
- 2 min read
Everyone has heard of it—DOGE, the Department of Government Efficiency. Established by executive order on January 20, 2025, DOGE was created to oversee mass layoffs of federal workers, access data from multiple federal agencies, and cut funding for initiatives related to DEI (Diversity, Equity, and Inclusion), climate change, foreign aid, consumer financial protection, and scientific research. Upon its inception, Elon Musk was appointed senior advisor to the president and became the de facto leader of DOGE.
Many Americans support efforts to reduce funding for the government-sponsored programs mentioned above, but there is growing concern about the economic impact of laying off thousands of federal workers.
Currently, over 3 million people are employed by the U.S. federal government, with nearly 20 million employed at the state and local levels. In 2024, the federal government added 47,000 net new jobs and 300,000 over the last decade. These individuals work in agencies ranging from local post offices to the CIA (Central Intelligence Agency). Analysts estimate that DOGE’s cuts could shrink the federal workforce by 300,000 to 400,000 throughout 2025. So far, nearly 100,000 workers have been affected by the agency’s actions. Economists project these layoffs will create ripple effects on unemployment, wages, and the broader economy.
There are currently around 8 million private-sector job openings in the United States, where many former government workers will likely seek employment. This influx into the private sector could push wage growth lower. Cities like Washington, D.C., where government employees make up about 30% of the workforce, are expected to be the most affected.
The market’s reaction to these uncertain policies has been negative. The 10-year Treasury yield, a barometer of economic growth and inflation, has fallen by 0.7% over the last four weeks. Large- and small-cap stocks are in the red this year, while gold has surged 10%. Americans have expressed uncertainty regarding recent policymaking, though that doesn’t necessarily mean they oppose it. Whether these changes lead to long-term efficiency or unintended economic consequences remains to be seen, leaving the nation in a state of watchful anticipation.
Sources:
https://www.statista.com/statistics/204535/number-of-governmental-employees-in-the-us/#:~:text=U.S.%20number%20of%20government%20employees1982%2D2023&text=In%202023%2C%20around%2019.58%20million,million%20people%20in%20that%20year.
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