DOGE layoffs may ‘overwhelm’ unemployment system for federal workers

The Trump administration’s purge of federal employees could flood an unemployment advantages system ill-equipped to deal with the deluge, triggering delays in assist for jobless staff, in line with a brand new report.

The terminations of federal staff by the Trump administration’s so-called Division of Authorities Effectivity — headed up by billionaire entrepreneur Elon Musk — could finally stretch into the lots of of hundreds. That might quantity to the most important mass layoff in U.S. historical past.

The dimensions of cuts would probably “overwhelm” the Unemployment Compensation for Federal Workers (UCFE) program, the “not often utilized and creaky” system most federal staff use to say unemployment advantages, in line with a report by The Century Basis, a progressive suppose tank.  

The outcome would probably be longer time frames to gather monetary assist that is meant to assist staff keep afloat and forestall them from depleting financial savings as they search for new jobs, stated Andrew Stettner, the group’s director of economic system and jobs, who co-authored the evaluation.

“We’re already listening to it is taking a very long time for individuals to get their advantages,” stated Stettner, former director of unemployment insurance coverage modernization on the U.S. Labor Division throughout the Biden administration. “And it’ll in all probability solely worsen.”

The Division of Labor oversees the UCFE program, which is run by state unemployment businesses.

Greater than 62,000 federal staff throughout 17 businesses misplaced their jobs in February alone, Challenger, Grey & Christmas, an outplacement agency, reported Thursday. By comparability, there have been 151 cuts in January and February final 12 months, it stated.

Employers have introduced virtually 222,000 job cuts thus far in 2025, the very best year-to-date complete since 2009, Challenger, Grey & Christmas stated.

“The sudden surge of claims as a result of federal layoffs has some worrisome similarities to the pandemic, regardless of its a lot smaller scale,” in line with the Century report.

States must course of a “drastically higher” quantity of claims for the UCFE program, it stated.

The Labor Division did not return a request from CNBC for remark.

The UCFE program differs from the unemployment insurance coverage system for private-sector staff — and has distinctive challenges.

The private-sector UI system is extra automated, whereas that for federal staff requires extra handbook inputs that may considerably sluggish the method throughout instances of excessive quantity, Stettner stated.

Particularly, personal firms go an worker’s earnings and employment data on a quarterly foundation to the suitable jurisdiction, Stettner stated. (That jurisdiction could also be a state, territory or the District of Columbia, relying on the place the worker labored.)

These employment data are crucial to find out elements like eligibility and weekly funds if a employee claims jobless advantages.

Nonetheless, the UCFE program is not as streamlined. After a employee applies, the state fills out a kind and submits a request to the federal company at which an worker labored, which then verifies the declare’s accuracy, Stettner stated.

The federal system is mostly “such a small program, it mainly works by hand,” he stated.

About 7,400 individuals had been gathering federal unemployment advantages as of Feb. 15, up roughly 12% from the identical time final 12 months, in line with Labor Division information issued Thursday. The quantity may simply climb to 10 or 20 instances that quantity, greater than they system has ever fielded, Stettner stated.

Moreover, the federal authorities could attempt to contest claims in sure conditions, which may additional sluggish the method, he added. For instance, many probationary staff acquired termination letters saying they’d been fired for trigger; whereas that characterization does not usually stop staff from getting advantages, the federal government could use it as a cause to dispute a advantages software, Stettner stated.

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Federal staff could discover themselves in a tricky monetary scenario if they cannot entry advantages rapidly.

That is as a result of it might be tough for staff to search out new jobs, particularly in regional labor markets most impacted by mass layoffs.

“Sadly, this labor market won’t be conducive to a fast rebound — hiring charges are comparatively low and uncertainty throughout the economic system is prone to make companies cautious about labor investments,” Elizabeth Renter, a senior economist at NerdWallet, wrote Thursday.

Even so, it is unclear what number of cuts will finally occur — or stick.

The Trump administration has hit latest highway blocks in its makes an attempt to cull federal jobs. For instance, a federal choose in San Francisco final week stated federal mass layoffs had been probably unlawful and directed the U.S. Workplace of Personnel Administration to rescind directives ordering some businesses to fireside probationary staff.

Assistant U.S. Lawyer Kelsey Helland argued for the federal government that OPM had requested, not ordered, businesses to put off probationary staff.

“It seems the administration needs to chop much more staff, however an order to fireside the roughly 200,000 probationary staff was blocked by a federal choose,” stated Challenger, Grey & Christmas. “It stays to be seen what number of extra staff will lose their Federal Authorities roles.”

Moreover, the Benefit Programs Safety Board, which handles federal employee disputes, briefly reinstated about 6,000 staff on the U.S. Division of Agriculture of their previous positions efficient Wednesday.