President Donald Trump will listen at the Cabinet meeting held at the White House on February 26, 2025.
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A federal purge in the Trump administration could flood unemployment benefits systems that are not well equipped to deal with the flood, causing delays in aid for unemployed workers, according to a new report.
The end of federal workers through the Trump administration’s so-called government efficiency — led by billionaire entrepreneur Elon Musk — could ultimately grow to hundreds of thousands. It will be the largest massive layoff in US history.
The scale of the reduction will “overwhelm” the “sparkling” system that “rarely utilizes and squeals” systems of the Unemployment Compensation (UCFE) program for Federal Employees (UCFE) programs, according to a report by the Century Foundation, a progressive think tank.
The results are likely to be a longer time frame for gathering financial aid to help workers float, and are intended to prevent them from draining their savings when they are seeking new jobs, said Andrew Stettner, the group’s economic director, co-authored the analysis.
“We’ve seen a lot of people who have been working hard to get into,” said Stetner, former director of unemployment insurance modernization at the U.S. Labor Bureau during the Biden administration. “And that’s probably just getting worse.”
The Department of Labor oversees UCFE programs managed by the state’s unemployment agencies.
Elon Musk reads a chainsaw called “Long Live Freedom, Damn It” at the annual Conservative Political Action Conference on February 20, 2025.
Saul Roeve | AFP | Getty Images
More than 62,000 federal workers from 17 agencies lost their jobs in February alone, the Challenger, Gray & Christmas, Outplacement Company reported Thursday. In comparison, he said there were 151 cuts in January and February last year.
Employers announced 222,000 job cuts so far in 2025. This is the highest total date since 2009, Challenger, Glenger and Christmas said.
“The sudden surge in claims due to federal layoffs, despite being much smaller, has some disturbing similarities with the pandemic,” according to the Century Report.
The state said it would need to process “significantly large” billing volumes for the UCFE program.
The Labor Bureau did not return a request from CNBC for comment.
Federal Unemployment Programs More “Manual”
Unlike the unemployment insurance scheme for private workers, the UCFE program has its own unique challenges.
Private sector UI systems are more automated, but for federal workers, there is a need for more manual input that can significantly slow down processes at large times, Stettner said.
Specifically, private companies pass appropriate jurisdiction on employee revenue and employment records quarterly, Stetzner said. (That jurisdiction could be a state, territory, or the District of Columbia, depending on where the employee worked.)
These employment records are required to determine factors such as eligibility and weekly payments when workers claim unemployment benefits.
However, the UCFE program has not been streamlined. After workers are applied, the state fills out the form and submits the request to the federal agency where the employee worked, which verifies the accuracy of the claim, Stettner said.
The federal system is generally “a small program like this and it basically works by hand,” he said.
As of February 15, about 7,400 people had collected federal unemployment benefits, an increase of about 12% from last year, according to Labor Bureau data issued Thursday. That number could easily rise 10 or 20 times more easily than the system has previously been fielded, Stettner said.
Additionally, the federal government may attempt to challenge the claim in certain circumstances. This can slow the process down even further. For example, many probation workers received a firing letter saying they were fired for the cause. The characteristics generally do not prevent workers from obtaining benefits, but the government may use it as a reason to challenge benefits applications, Stetner said.
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Federal workers can be in a tough financial situation if they don’t have access to benefits right away.
That’s because it may be difficult for workers to find new jobs, especially in the local labor market, which is most affected by massive layoffs.
“Unfortunately, this labour market does not encourage rapid rebounds. Employment rates are relatively low and overall economy uncertainty is likely to make businesses cautious about labor investment,” wrote Elizabeth Renter, senior economist at Nerdwallet, on Thursday.
Doge, Roadblock for the Trump Administration
Still, the number of cuts that will ultimately occur is unknown.
The Trump administration has recently collided with the Roadblock in an attempt to cull federal work. For example, last week a federal judge in San Francisco said large federal layoffs are likely illegal and directed the U.S. Personnel Office to withdraw an order that some agencies would fire probation workers.
US lawyer Aide Kelsey Heland argued the government that OPM asked, not ordering probation workers to be fired.
“The administration wants to cut more workers, but the order to fire around 200,000 probation employees was blocked by a federal judge,” Challenger Glenger said. “It remains to be seen whether more workers will lose their federal role.”
Additionally, the Merit Systems Protection Commission, which handles federal workers’ disputes, temporarily revived about 6,000 workers on an old USDA position on Wednesday.
