Trump’s workforce cuts ripple through labor market
U.S. employers scaled back hiring plans in February, while federal government layoffs surged to their highest level since late 2020, according to Tuesday’s Job Openings and Labor Turnover Survey (JOLTS) report from the Bureau of Labor Statistics.
Job openings fell to 7.57 million in February, down from 7.76 million in January. Despite the decline, overall labor market turnover remained steady, with little change in the rates of hires, quits, and total separations. However, layoffs rose to 1.79 million, up from 1.67 million the previous month.
Federal job cuts hit four-year high
The most dramatic shift occurred in the public sector. Federal layoffs jumped to 22,000 in February, a sharp increase from just 4,000 in January, marking the highest monthly figure since November 2020. The layoffs coincide with sweeping restructuring across federal agencies under the direction of Elon Musk’s newly formed Department of Government Efficiency.
“Federal layoffs are beginning to make their way into the data, and there’s more to come,” wrote Elizabeth Renter, senior economist at NerdWallet. “The visibility of ongoing cuts will only become more apparent in the weeks and months ahead.”
Hiring slows as uncertainty builds
While the overall churn in the labor market has slowed, some sectors did see an uptick in hiring. Professional and business services, mining, information, and arts and entertainment registered slight gains. But for most industries, hiring activity remained stagnant.
“It’s just kind of static,” said Allison Shrivastava of the Indeed Hiring Lab. “Businesses need strong signals about the economy to feel confident hiring and expanding. Recent tariff uncertainty is only adding to the fog.”
Policy turbulence dampens job creation
Trump’s aggressive policy shifts — particularly regarding federal downsizing and international trade — are adding pressure to an already cooling labor market. Many economists warn that early 2025 figures may reflect the “calm before the storm.”
FactSet estimates had forecast February job openings to fall to 7.625 million. The actual figure of 7.57 million came in below expectations, reinforcing concerns about slowing demand for labor.
While professional services and education saw job openings rise, the broader decline underscores widespread caution among employers. The number of voluntary quits — a key measure of worker confidence — has remained low, suggesting workers are reluctant to seek new opportunities in the current climate.
All eyes on Friday’s jobs report
The JOLTS report is the first in a series of labor market indicators due this week. Attention now turns to Friday’s March jobs report, where economists expect a slowdown, with 125,000 net new jobs forecast, down from previous months.
