Washington, D.C. — As the nation anticipates the June employment figures set to be released on Thursday, economists are raising concerns that sweeping layoffs initiated under the Department of Government Efficiency (DOGE) may now be affecting overall job market trends.
The initiative—launched under the Trump administration and overseen by Elon Musk—has resulted in the elimination of more than 280,000 federal positions so far this year, according to statistics from Challenger, Gray & Christmas. While the broader labor market had remained stable in previous months, experts are now observing early signs of strain, with fewer job openings and a surge in applications from recently laid-off government employees.
“There’s still uncertainty around how this will ripple through the economy,” said Cory Stahle, Senior Economist at Indeed Hiring Lab. “The main concern is whether these displaced workers can successfully transition into new roles, especially as demand for white-collar professionals wanes.”
White-Collar Hiring Slows
Indeed reports a 150% increase in applications from former federal workers since January, particularly in digital-focused roles like software engineering, marketing, and data analysis.
Meanwhile, U.S. job openings declined by 5% from January through April, and the hiring rate remains stuck at levels last seen in 2014, based on Bureau of Labor Statistics (BLS) data.
Though some government layoffs have been rescinded and federal hiring hasn’t come to a complete stop, private-sector demand for office-based positions remains muted. Stahle notes that while jobs requiring physical presence and skilled labor have held up, roles requiring advanced education or digital skills are now harder to secure.
“Hiring demand has fallen off much more sharply for knowledge jobs than for hands-on trades,” he explained. “That’s making it tougher for many professionals to reenter the job market.”
All Eyes on June Jobs Data
The BLS is set to unveil its June nonfarm payroll report this Thursday. Economists polled by Dow Jones expect around 110,000 new jobs to be added—potentially marking the sixth month in a row with gains below 150,000. If the trend holds, the first half of 2025 would be the weakest start to any year since the 2008 financial crisis, excluding the pandemic-stricken 2020.
The jobless rate is expected to inch up modestly to 4.3%.
These projections follow a disappointing ADP report showing a net loss of 33,000 private-sector jobs in June, falling far short of the anticipated 100,000 gain.
“From afar, the labor market might still seem healthy,” Stahle said. “But underneath, fewer sectors are doing the heavy lifting.”
Wider Economic Strains at Play
Beyond the impact of the DOGE layoffs, elevated interest rates are continuing to drag down tech hiring. Many technology companies and startups, heavily reliant on financing to scale, have been reluctant to expand amid expensive borrowing conditions.
Although former President Trump has urged the Federal Reserve to cut interest rates, Fed Chair Jerome Powell has maintained a cautious stance, emphasizing the need to wait for more data. Trump has intensified his criticism, openly demanding Jerome Powell’s resignation.
Following the pandemic, tech companies ramped up hiring aggressively,” Stahle noted. “They brought on a lot of talent early, but now, with capital tightening, the urgency to expand just isn’t there anymore.”
