The Job Market is ‘Frozen.’ That’s Not a Good Sign for DOGE Casualties
The recent changes in government programs and agencies under the Trump administration have led to a significant influx of federal workers joining the job market. This surge in job applications is particularly noticeable among those affected by the Department of Government Efficiency’s restructurings.
This wave of job seekers is entering a labor market characterized as “a little bit frozen,” according to Allison Shrivastava, an economist at the Indeed Hiring Lab. Although stable for now, this market situation reflects the broader trends of uncertainty surrounding President Donald Trump’s economic policies, which are impacting business decisions and slowing down hiring, especially for specialized and white-collar positions.
Recent data from the Labor Department highlights that initial claims for unemployment benefits have not seen a spike, remaining mostly unchanged from the previous week. For the week ending March 22, there were an estimated 224,000 initial claims for jobless benefits, a slight decline from the week before. However, there is an increase in federal workers filing for unemployment, although these numbers aren’t escalating on a weekly basis with 821 federal workers filing initial claims for the week ended March 15.
Additionally, employment search data underscores a rise in job searches from federal workers, with a notable increase in DOGE-adjacent applications by 50% in February. This has brought application levels to 75% above those recorded in 2022. It is common for federal workers to file more job applications following presidential inaugurations, but the scale of the current uptick is unprecedented.
This development showcases a unique cohort of job seekers with specialized skills, indicated by the surge in search terms such as “horticulture,” “employee relations,” and “policy analyst.”
The hunt for white-collar jobs has become increasingly challenging due to the pandemic. Initially, sectors like technology, financial services, and consulting saw a hiring boom as the pandemic enabled remote work and altered consumer habits. However, as the situation is normalizing, technology firms are adjusting their workforce levels, leading to layoffs in some cases and a general slow-down in hiring.
Meanwhile, sectors such as health care, leisure and hospitality, and government (primarily state and local) have been responsible for much of the job growth. This reflects several trends, including an aging population, the return to in-person services post-pandemic, and the need to fill roles that were previously overshadowed by competitive private sector jobs.
Over the past year, the rate of job growth has decelerated, due in part to the Federal Reserve’s efforts to control inflation with high-interest rates, which aim to regulate demand. However, there’s a troubling trend emerging: a significant reduction in the labor market’s dynamism. Fewer businesses are hiring, workers are less inclined to leave their jobs, and the unemployed are delaying re-entry into the workforce.
This stagnation initially seemed tied to election-year uncertainties and the aftereffects of over-hiring and rising prices, alongside the impact of historically high interest rates. But even after the election provided some clarity, economic uncertainty remains high amid concerns over sweeping policies such as tariffs and federal job cuts.
As Shrivastava points out, the job market being ‘frozen’ offers a sense of stability, but a prolonged freeze could lead to negative outcomes similar to frostbite.
This scenario is unfolding and will see further developments as economic conditions continue to evolve.
This situation highlights the complexities and dynamic nature of our current job market. The intertwining factors of political changes, economic policies, and global health crises have combined to create a landscape requiring careful navigation for those seeking employment.
