The D.C. region feels the economic blow as do other sections of the country
-
Thousands of federal employees lose pay as deferred resignations, firingstake effect.
-
Unemployment rising faster than the national average in affected areas, with federal job cuts piling on.
-
A looming government shutdown could deepen the economic pain for workers and contractors.
When the fiscal year ends Tuesday, thousands of federal employees on paid leave will officially exit the government payroll. In addition, the White House budget office has told agencies to prepare for mass firings if a shutdown occurs, raising the prospect of another blow to the civil service. We see a lot of strong early warning signs, said Tracy Hadden Loh, a fellow at Brookings Metro, in a Washington Postreport.
The Washington region in particular faces economic hardship as paychecks stop coming for thousands of federal employees who accepted the governments deferred resignation offer. The change coincides with the threat of a federal shutdown, which could delay pay for those who remain on the job and cut off income altogether for contractors.
Although most acutely felt in the D.C. region, the cutbacks are biting into the economy throughout the country, especially in areas with large numbers of federal employees and military installations.Cities with high federal or agency presence face disproportionate vulnerability. These include Baltimore, Atlanta, Denver, Houston, Ogden (UT), Tampa, San Antonio, and smaller metros reliant on VA hospitals or federal research sites.
The Washington regions unemployment rate has climbed more than eight times faster than the national rate since January, according to a Brookings Institution analysis. Federal job losses have accelerated, while the share of residents with low credit scores and homes for sale has grown more quickly than elsewhere in the country. Private sector job growth has stalled, leaving the economy with little cushion against government cuts.
The American Communities Project mapped federal employment by county, finding that many smaller counties (including those with military bases, federal labs, or federal land) have 5 % or more of the workforce tied to the federal government.
A report from the Atlanta Fed estimates thatthe federally supported workforce (i.e. including contractors/grant recipients) could number in the millions, so layoffs could ripple further than just the civil service.
Workers describe despair in job search
For many federal employees, the hardship has already begun. One former State Department worker said he has applied for more than 50 jobs without success.
Some employees accepted the resignation offer because they were near retirement. Others left out of principle or fear of termination. The initiative, pushed by PresidentTrump and billionaire Elon Musk through the U.S. DOGE Service, was billed as part of a sweeping reorganization of the federal bureaucracy. More than 154,000 federal workers nationwide had volunteered to resign while still drawing pay earlier this year, with officials estimating that roughly 275,000 will have departed through buyouts and retirements by the end of the fiscal year.
In the Washington metro area, where one in ten jobs are federal and many others depend on federal spending, the cuts land especially hard. Private sector growth is not making up the difference. DOGE has been a disaster for Washington, D.C., said Ankit Jain, one of the citys shadow senators. For some, the question now is whether to stay in the region at all or to leave behind lives and careers built around federal service.
Posted: 2025-09-29 00:08:35
