The thousands of workers laid off by the Trump administration’s Department of Government Efficiency appear to be taking a toll on the U.S. job market.
Reuters reported Thursday that Global outplacement firm Challenger, Gray & Christmas said planned job cuts vaulted to 172,017 last month, a 245% increase and the highest level since July 2020, when the economy was in the grips of the Covid-19 pandemic. It was the highest February total since the Great Recession 16 years ago.
Government accounted for the bulk of layoffs, with Challenger tracking 62,242 announced job cuts by the federal government from 17 different agencies, Reuters reported. The government has laid off about 62,530 workers in the first two months of the year, a whopping 41,311% increase compared to the same period in 2024.
“When mass layoffs occur, it often leaves remaining staff feeling uneasy and uncertain,” Andrew Challenger, senior vice president at Challenger, Gray & Christmas, told Reuters. “The likelihood that many more workers leave voluntarily is high.”
Challenger said the “DOGE impact” topped reasons for job cuts and was blamed for 63,583 layoffs, linked both directly to the federal workforce and contractors.
Outside government, there were job cuts in retail, technology, services and consumer products industries. The federal government layoffs are not expected to show up in February’s employment report, which is scheduled for release on Friday, as the purges happened outside the survey week.
But the hiring and funding freezes could have an impact on government and contractor employment. Nonfarm payrolls likely increased by 160,000 jobs after rising 143,000 in January, a Reuters survey of economists showed. The unemployment rate is forecast unchanged at 4.0%.
