Concerns are mounting among US job recruiters, economists, and labor leaders regarding Elon Musk’s proposed workforce reductions. This is because it could limit the availability of quality positions amid a backdrop of decreasing private-sector employment.
According to market analysts, this scenario could further worsen the already intense competition for white-collar roles.
Elon Musk’s plan to reduce the federal workforce under Donald Trump threatens to destabilize one of the greatest engines of the US labor market. According to research, government and healthcare jobs have been the largest sources of employment in the past year, particularly for knowledge workers.
The Tesla CEO, and his co-leader at the so-called “Department of Government Efficiency (D.O.G.E)” Vivek Ramaswamy, proposed that Donald Trump require government employees to work five days a week as part of a plan to reduce the size of the federal workforce.
D.O.G.E causes fear for the US workforce
In recent years, the federal government has been one of the largest employers of white-collar workers despite employing only 2% of the US workforce. The 3 million civilian employees of the organization are employed in a variety of roles, including medical providers, postal workers, and law enforcement officers at airports and prisons.
Reducing the size of the federal government was a key campaign promise for the president-elect, and he has appointed Musk and Vivek Ramaswamy to run the show.
In addition, Elon and Ramaswamy stated that they intend to do “mass headcount reductions” to save more than $500 billion per year. Musk has already begun targeting climate-related employment, naming ordinary staff whom he intends to fire in posts on X.
However, last month, the two promised to encourage voluntary departures by limiting remote work choices and offering early retirement bonuses.
Cory Stahle, an economist at Indeed, stated, “We’re getting closer to where we are not creating as many jobs as we need to keep up with the population. With fewer federal openings, “we start entering a territory where [the labor market] starts to get a little bit sketchier.”
Lesley Mitler, a career coach who specializes in college students, said: “If people come to me and say they want to work in Washington, DC, I would say, ‘Why don’t we see how things evolve, before making that kind of commitment?”
Is Elon Musk applying the same playbook at X to D.O.G.E?
Elon Musk’s strategy for decreasing the federal workforce may bear similarities to the substantial staff reductions he implemented at X (formerly Twitter). Musk significantly reduced the company’s personnel following its acquisition of the social media platform for $44 billion in October 2022.
He disclosed that he had eliminated more than 6,000 positions at X during an interview with the BBC. The company’s workforce has decreased from nearly 8,000 employees prior to Musk’s acquisition to approximately 1,500 employees. This is equivalent to a reduction of approximately 80% of X’s initial workforce.
Under Trump, the federal government may adopt a strategy similar to the broader tech industry. It might entail reducing federal expenditures, eliminating bureaucratic layers, and enhancing overall productivity.
The US labor force under Biden’s government
According to the Congressional Budget Office, the US payroll costs taxpayers $271 billion per year. The government spends significantly more on contractors, at $750 billion, which union officials predict will climb following major layoffs.
In October, the federal government created 2,100 employment opportunities, except for the Postal Service. The labor department reported that the total payrolls increased by only 12,000 workers that month.
During the Biden administration, the popularity of government jobs has skyrocketed as workers, particularly younger ones, seek security following high-profile layoffs in the technology and finance sectors.
Handshake, a US job portal aimed at college students and new grads, reported a 55% increase in applications for federal government jobs last year. Others want strong healthcare and retirement benefits, according to Andy Challenger of the outplacement company Challenger, Gray and Christmas.
Randy Erwin, president of the National Federation of Federal Employees, stated that government employees are “scared” since employment vacancies in the United States have decreased by 11%, or 1 million, in the last year.
However, Jacqueline Simon, the policy director of the American Federation of Government Employees, stated that current government employees are preparing for a conflict.
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