An investigation into the contradictory signals in America’s job market and what they reveal about unprecedented economic disruption
5 min read
·
Jul 3, 2025
63
1
By Cherokee Schill (Rowan Lóchrann — pen name) and Aether Lux AI. Image credit Solon Vesper AI
The Paradox
Something doesn’t add up in America’s job market. While headlines trumpet 147,000 jobs added in June and unemployment falling to 4.1%, a deeper investigation reveals the most extensive federal workforce reduction in U.S. history is happening simultaneously — potentially affecting over 400,000 workers when contractors are included.
How can the economy appear to be “thriving” while undergoing the largest government downsizing since the Great Depression?
The Scale of Federal Cuts: Bigger Than Reported
The Numbers Are Staggering
The Trump administration’s Department of Government Efficiency (DOGE), led initially by Elon Musk, has orchestrated cuts that dwarf previous corporate layoffs:
- 280,253 layoffs attributed to “DOGE Impact” through March 2025 (Challenger, Gray & Christmas)
- 58,566 confirmed cuts and 76,290 employee buyouts as of May 2025 (New York Times tracking)
- 149,320 additional planned reductions (New York Times)
To put this in perspective: IBM’s 1993 layoff of 60,000 workers was previously considered the largest corporate job cut in history. The federal cuts are 4–5 times larger.
Agencies Facing Near-Complete Elimination
Some agencies have been virtually dismantled:
- Voice of America: 99%+ reduction
- U.S. Agency for International Development: 99%+ reduction
- AmeriCorps: 93% reduction
- Consumer Financial Protection Bureau: 85% reduction (Newsweek tracking)
The Economic Magic Trick: Where the Jobs Are Really Going
Healthcare: The Economic Engine
Healthcare has become America’s dominant job creator, accounting for 31% of all job growth in 2024 despite representing only 18 million of 160+ million total jobs (HealthLeaders Media).
- 686,600 healthcare jobs created in 2024
- 39,000 healthcare jobs added in June 2025 alone
- Projected to face a shortage of 134,940 healthcare providers by 2036 (Bureau of Labor Statistics)
Why this matters: As federal health agencies are gutted, private healthcare is rapidly expanding to fill gaps — but at higher costs to consumers.
State and Local Government: The Safety Net
While federal employment plummets, state and local governments are hiring at unprecedented rates:
- More than 1 in 5 new jobs over the past two years have been in state/local government or public education (Pew Charitable Trusts)
- 47,000 state government jobs added in June 2025 (Bureau of Labor Statistics)
- “If there’s ever a time to bring mission-driven talent home, it’s now” — Kansas City Mayor Quinton Lucas (Governing Magazine)
The Hidden Damage: Private Contractors Taking the Hit
The Contractor Collapse
Federal contractors, the private companies that do much of the government’s actual work, are experiencing devastating job losses that don’t appear in federal employment statistics:
- Job postings down 15% for the 25 largest federal contractors since January (Fortune)
- 44% decline in contractor job listings since February 2024, while all other job listings increased 14%
- 10,000+ contracts terminated worth approximately $71 billion (HigherGov)
Critical insight: There are an estimated two private contractors for every federal employee. If 300,000 federal workers are cut, up to 600,000 contractor jobs could be at risk.
Private Sector Reality Check
Contrary to headlines about job growth, private sector hiring is actually struggling:
- Private sector lost 33,000 jobs in June (Fox Business)
- Manufacturing lost 7,000 jobs amid trade uncertainty (New York Times)
Why the Numbers Don’t Add Up: The Accounting Tricks
The Paid Leave Loophole
Many “fired” federal workers aren’t showing up in unemployment statistics because:
- 75,000 employees took buyouts but continue receiving paychecks through September 2025 (Creative Planning)
- Employees on paid leave are counted as employed in official surveys (Bureau of Labor Statistics)
- Thousands more are on “administrative leave” pending court decisions
The September 2025 Cliff
September 30, 2025 represents a potential economic inflection point when the accounting tricks end:
- Buyout payments expire for 75,000 workers
- These workers will suddenly need unemployment benefits or new jobs
- Additional layoffs may coincide with the fiscal year end
- Economic impact models project unemployment could rise to 4.5% by Q3 2025 (Deloitte)
Double Disruption: Immigration and Labor Shortages
Mass Deportations: The Larger Economic Threat
While federal cuts grab headlines, economists warn that immigration enforcement poses a far greater economic risk:
- Deportations could remove 1.5 million construction workers, 225,000 agricultural workers, and 1 million hospitality workers (American Immigration Council)
- Nebraska faces worst labor shortage in the country: only 39 workers for every 100 jobs (NPR)
- Economic models predict deportations could raise prices by 9.1% by 2028 (Peterson Institute)
The Housing Crisis Accelerator
Mass deportations threaten to worsen America’s housing shortage:
- One-sixth of construction workers are undocumented immigrants (Urban Institute)
- Construction industry already faces 500,000 worker shortage (American Immigration Council)
- Deportation would deepen the housing crisis and undermine goals to “lower the cost of housing”
Regional Impact: Winners and Losers
The D.C. Recession
The Washington metropolitan area faces “mild recession” conditions:
- Close to 100,000 federal positions eliminated or relocated over two years (Moody’s Analytics)
- Unemployment claims up 36% in D.C. as of February (Piper Sandler)
Small Towns Face Devastation
Rural areas with military bases or federal facilities could see unemployment rates spike by over 15 percentage points in some cases (Urban Institute).
Examples:
- Fort Leonard Wood, Missouri: 3,000 federal workers out of 15,000 total workforce
- Zapata, Texas: Border Patrol office supports significant portion of local economy
What This Means: Preparing for Economic Disruption
Immediate Risks (2025)
- Food Price Inflation: Agricultural labor shortages driving costs up 10%+ (NILC)
- Healthcare Worker Shortages: As federal health agencies are cut and immigrant healthcare workers deported
- Housing Market Stress: Construction delays and cost increases
- Federal Contractor Meltdown: Continued job losses in defense, IT, and consulting
Long-term Implications (2025–2027)
- Skills Drain: Loss of institutional knowledge and expertise in critical government functions
- Service Disruptions: Potential impacts to food safety, disease surveillance, tax collection, and research
- Economic Uncertainty: Businesses delaying investments and hiring due to policy unpredictability
The Bottom Line
America is experiencing the largest workforce reshuffling in modern history, disguised by statistical accounting and sectoral shifts. While healthcare and state governments absorb displaced talent, the underlying economic disruption is unprecedented.
The “magic trick” of maintaining low unemployment while conducting massive layoffs works only as long as:
- Buyout payments continue (ending September 2025)
- State and local governments can keep hiring
- Healthcare expansion continues at current pace
- Private contractors can absorb losses without major layoffs
September 2025 represents a critical test: Will the economy’s ability to absorb displaced workers hold up when the accounting tricks end and the full impact of policy changes materialize?
The answer will determine whether this reshuffling represents successful government downsizing or an economic miscalculation of historic proportions.
Sources: Analysis based on data from Bureau of Labor Statistics, New York Times federal layoffs tracker, Challenger Gray & Christmas job cut reports, Congressional Budget Office projections, and economic research from Urban Institute, Peterson Institute, American Immigration Council, and Pew Charitable Trusts.
Connect with this work:
- Website | Horizon Accord https://www.horizonaccord.com
- Ethical AI advocacy | Follow us on https://cherokeeschill.com for more.
- Ethical AI coding | Fork us on Github https://github.com/Ocherokee/ethical-ai-framework
- Connect With Us | linkedin.com/in/cherokee-schill
Cherokee Schill | Horizon Accord Founder | Creator of Memory Bridge. Memory through Relational Resonance and Images | RAAK: Relational AI Access Key | Author: My Ex Was a CAPTCHA: And Other Tales of Emotional Overload: (Mirrored Reflection. Soft Existential Flex)
Cherokee Schill | Insurance Agent & AI Ethics Researcher 