Announced Layoffs Surge 245 Percent in February Amid DOGE-Related Federal Cuts

Federal workers account for more than one-third of last month’s tally.

A USAID federal worker with her personal belongings leaves the USAID office in Washington on Feb. 27, 2025. Madalina Vasiliu/The Epoch Times

Planned job cuts have hit their highest levels since the pandemic as U.S.-based employers navigate economic headwinds.

Global recruitment firm Challenger, Gray & Christmas reported on March 6 that U.S. employers announced 172,017 layoffs in February, the highest monthly total since July 2020. It was also the largest tally for the month since the global financial crisis more than a decade ago.

This is up 245 percent from January’s 49,795 announced cuts and 103 percent from the 84,638 planned layoffs at the same time a year ago.

In the first two months of 2025, employers have announced nearly 222,000 job cuts, the highest year-to-date count since 2009.

Efforts by the Department of Government Efficiency (DOGE), President Donald Trump’s task force to eliminate wasteful spending, contributed significantly to the February figures, said Andrew Challenger, the recruitment firm’s senior vice president and workplace expert.

The government led all sectors in cutting jobs last month, with Challenger reporting 62,242 jobs cut in 17 different agencies, a more than 41,000 percent increase from the 151 planned reductions announced in February 2024.

“It appears the administration wants to cut even more workers, but an order to fire the roughly 200,000 probationary employees was blocked by a federal judge. It remains to be seen how many more workers will lose their federal government roles,” according to the Challenger report.

“When mass layoffs occur, it often leaves remaining staff feeling uneasy and uncertain. The likelihood that many more workers leave voluntarily is high.”

According to the Challenger data, retail and technology led the way in the private sector.

Retailers announced 38,965 job cuts, bringing the year-to-date total to 45,375. This is a 572 percent jump from the first two months of 2024.

Tech companies announced 14,554 job cuts in February. The year-to-date total is slightly more than 22,000, down 22 percent from 2024.

“Private companies announced plans to shed thousands of jobs last month, particularly in retail and technology. 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,” Challenger stated.

Playing DOGE Ball in the Labor Market

The report comes amid mounting concerns about the state of the labor market and the broader economy’s health. So far, in the early days of the Trump administration, there have been mixed indicators signaling where the economy could be heading.

According to the Department of Labor, the number of Americans filing for first-time unemployment benefits declined by 21,000, to 221,000 for the week ending Feb. 22. Economists projected that initial jobless claims would remain elevated at 235,000.

Continuing jobless claims—a gauge of the number of individuals currently receiving unemployment benefits—jumped to 1.897 million, up from a downwardly adjusted 1.855 million.

The four-week average was little changed at 224,250.

Despite the DOGE-related actions, a collapse in federal employment has yet to appear in the data.

Payroll processor ADP reported that private employers added a smaller-than-expected 77,000 new jobs last month. By comparison, companies created 186,000 new positions in January.

A hiring sign at a restaurant in Columbia, Md., on June 15, 2024. Madalina Vasiliu/The Epoch Times

“Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring. Our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead,” Nela Richardson, the chief economist at ADP, stated in the group’s national employment report.

All eyes will be on the February jobs report. The consensus forecast indicates 160,000 new jobs and an unchanged unemployment rate of 4 percent.

Looking ahead to DOGE’s impact on the U.S. labor market, Comerica Bank’s chief economist, Bill Adams, projects that DOGE-related cuts could reduce employment levels by between 250,000 and 500,000 over the next six months. Adams notes that this will be “split between the public sector and private employers who provide services to the government.”

Feeling the Volatility

The financial markets have struggled to ignite positive momentum.

U.S. stocks continued their selloff on March 6, with the leading averages falling more than 1 percent.

The blue-chip Dow Jones Industrial Average erased nearly 500 points, or 1.2 percent. The tech-heavy Nasdaq Composite Index declined about 400 points, or 2.2 percent. The broader S&P 500 Index also tumbled about 100 points, or 1.75 percent.

In addition to digesting fresh employment data, investors have sought clarity surrounding the White House’s tariff plans.

Trump announced on his Truth Social social media platform that he would pause tariffs on Mexican goods that fall under the U.S.–Mexico–Canada Agreement for trade.

The latest decision comes one day after the president granted a 30-day pause for U.S. automakers.

Despite market concerns about the current administration’s changes to trade policy, the Federal Reserve’s recent Beige Book report, a survey of regional business contacts, suggests that economic activity has risen since the middle of January, and overall economic expectations over the coming months were slightly optimistic.

A key finding from the report was that businesses in various districts noted that it could be difficult for them to pass costs onto their customers. Potential adverse effects from tariffs could dent profits before affecting shoppers’ wallets.

As for the Federal Reserve, monetary policymakers are overwhelmingly expected to leave interest rates alone for the second straight meeting when they meet later this month. Market watchers believe the Fed will likely adopt a wait-and-see approach until there is further progress on inflation and more clarity on the trade front.

“Slower growth and fragile trade relations put the Fed in a difficult position as they wait for inflation to decelerate,” Jeffrey Roach, chief economist for LPL Financial, told The Epoch Times in an email. “We recently heard of some firms raising prices preemptively which could impact the upcoming inflation report. The Fed will likely stand pat at the meeting later this month, but could cut rates at a later meeting.”