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 support for jobless employees, in line with a brand new report.

The terminations of federal employees by the Trump administration’s so-called Division of Authorities Effectivity — headed up by billionaire entrepreneur Elon Musk — could in the end stretch into the tons of of 1000’s. That will quantity to the most important mass layoff in U.S. historical past.

The dimensions of cuts would seemingly “overwhelm” the Unemployment Compensation for Federal Workers (UCFE) program, the “hardly ever utilized and creaky” system most federal employees use to say unemployment advantages, in line with a report by The Century Basis, a progressive assume tank.  

The consequence would seemingly be longer time frames to gather monetary support that is meant to assist employees 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 folks to get their advantages,” stated Stettner, former director of unemployment insurance coverage modernization on the U.S. Labor Division through 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 companies.

Greater than 62,000 federal employees throughout 17 companies 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 nearly 222,000 job cuts to date in 2025, the very best year-to-date whole 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 should course of a “drastically better” 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 employees — and has distinctive challenges.

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

Particularly, personal firms move 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 obligatory 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 usually “such a small program, it mainly works by hand,” he stated.

About 7,400 folks have been accumulating federal unemployment advantages as of Feb. 15, up roughly 12% from the identical time final 12 months, in line with Labor Division knowledge issued Thursday. The quantity may simply climb to 10 or 20 occasions 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 employees acquired termination letters saying they’d been fired for trigger; whereas that characterization would not typically forestall employees from getting advantages, the federal government could use it as a purpose to dispute a advantages utility, Stettner stated.

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Federal employees 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 employees 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 more likely 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 in the end occur — or stick.

The Trump administration has hit latest street blocks in its makes an attempt to cull federal jobs. For instance, a federal decide in San Francisco final week stated federal mass layoffs have been seemingly unlawful and directed the U.S. Workplace of Personnel Administration to rescind directives ordering some companies to fireside probationary employees.

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

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

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