DOGE layoffs could ‘overwhelm’ unemployment system for federal employees

The Trump administration’s purge of federal workers could flood an unemployment advantages system ill-equipped to deal with the deluge, triggering delays in assist for jobless employees, in keeping 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 finally stretch into the lots of of hundreds. That will quantity to the biggest mass layoff in U.S. historical past.

The dimensions of cuts would possible “overwhelm” the Unemployment Compensation for Federal Staff, or UCFE, program, the “hardly ever utilized and creaky” system most federal employees use to assert unemployment advantages, in keeping with a report by The Century Basis, a progressive assume tank.  

The outcome would possible be longer time frames to gather monetary assist that is meant to assist employees keep afloat and stop them from depleting financial savings as they search for new jobs, stated Andrew Stettner, the group’s director of financial system and jobs, who co-authored the evaluation.

“We’re already listening to it is taking a very long time for individuals to get their advantages,” stated Stettner, former director of unemployment insurance coverage modernization on the U.S. Labor Division in the course of 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 businesses.

Greater than 62,000 federal employees throughout 17 businesses 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 yr, it stated.

Employers have introduced nearly 222,000 job cuts thus far in 2025, the very best year-to-date whole since 2009, Challenger, Grey & Christmas stated.

“The sudden surge of claims attributable to federal layoffs has some worrisome similarities to the pandemic, regardless of its a lot smaller scale,” in keeping with the Century report.

States must course of a “drastically higher” 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 personal sector employees — and has distinctive challenges.

The non-public 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, non-public corporations go an worker’s earnings and employment information 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 information are obligatory to find out elements like eligibility and weekly funds if a employee claims jobless advantages.

Nevertheless, the UCFE program is not as streamlined. After a employee applies, the state fills out a type 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 principally works by hand,” he stated.

About 7,400 individuals had been amassing federal unemployment advantages as of Feb. 15, up roughly 12% from the identical time final yr, in keeping with Labor Division information issued Thursday. The quantity might 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 might additional sluggish the method, he added. For instance, many probationary employees acquired termination letters saying they’d been fired for trigger; whereas that characterization does not typically forestall employees from getting advantages, the federal government could use it as a cause to dispute a advantages utility, Stettner stated.

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Federal employees could discover themselves in a troublesome monetary state of affairs if they cannot entry advantages shortly.

That is as a result of it could be troublesome for employees to search out new jobs, particularly in regional labor markets most impacted by mass layoffs.

“Sadly, this labor market is not going to be conducive to a fast rebound — hiring charges are comparatively low and uncertainty throughout the financial 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 finally occur — or stick.

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

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

“It seems the administration desires to chop much more employees, however an order to fireside the roughly 200,000 probationary workers was blocked by a federal choose,” 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, quickly reinstated about 6,000 employees on the U.S. Division of Agriculture to their outdated positions efficient Wednesday.