Federal Employee Layoffs: Key Impacts & Strategies

Federal employee layoffs aren’t just about numbers on a spreadsheet; it’s about livelihoods, families, and financial security. 

Ever wondered how many civilian employees work for the federal government? As of FY 2023, the U.S. federal government employed approximately 2.26 million civilian workers (excluding the Postal Service). 

However, ongoing layoffs have significantly reduced this number.

While government decisions aim to benefit society, they often disrupt certain groups. Recent changes under Trump’s federal workforce plans have left many employees wondering: 

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What’s next?

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 President Donald J. Trump has signed an Executive Order implementing the Department of Government Efficiency (DOGE) workforce optimization initiative. This directive aims to reshape the government workforce by increasing efficiency and federal employee layoffs to only essential positions.

Key changes outlined in the Executive Order include:

• Making the federal workforce more efficient and results-driven.
• Requiring agency heads to coordinate with DOGE to downsize federal employment.
• Directing the Office of Personnel Management (OPM) to ensure federal employees adhere to the highest standards of conduct.

With these changes, many wonder whether this is the beginning of federal employee layoffs and if the government will continue shrinking under Trump plans for federal employees. Understanding these developments is crucial for those impacted.

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April 2025 Update

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The Trump administration has recently reaffirmed its push to reshape the federal workforce by moving ahead with a revised version of the controversial "Schedule F" policy. Now renamed “Schedule Policy/Career”, the rule is designed to reclassify approximately 50,000 federal employees—about 2% of the workforce—as “at-will” employees. This change effectively strips them of long-standing civil service protections and makes them easier to dismiss.

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According to the Office of Personnel Management (OPM), this reclassification primarily targets employees involved in policymaking roles. Trump aides argue that the administration requires greater authority to remove individuals they believe are underperforming or obstructing the president’s agenda. The move is part of a broader effort to ensure the federal bureaucracy is more responsive to the White House and aligned with the administration’s priorities.

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Originally introduced near the end of Trump’s first term, Schedule F was swiftly revoked by President Biden upon taking office. However, following Trump’s return to the presidency in January 2025, a new executive order reinstated the policy under its new name. The updated rule has been supported by senior administration officials, including Deputy Chief of Staff Stephen Miller and Budget Director Russ Vought, both of whom were involved in the initial development of Schedule F.

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Agencies have reportedly begun identifying positions to be reclassified under the new rule, prompting concerns about a potential wave of firings in the near future. Labour groups, including the American Federation of Government Employees and AFSCME, have already mounted legal challenges, arguing that the move undermines the merit-based system of the federal workforce and paves the way for political patronage.

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Critics warn that the policy could disrupt the continuity and neutrality of the civil service, potentially compromising essential functions of government—including services related to healthcare, research, and retirement benefits—if experienced personnel are displaced for political reasons.

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Strategies to Navigate federal employee layoffs

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With federal employee layoffs leading to layoffs and hiring freezes, federal employees must take a proactive approach to securing their careers, finances, and retirement plans. 

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1. Financial Planning for Stability

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The uncertainty of federal employee layoffs makes financial preparedness a top priority. Consider these steps:

• Emergency Savings: Aim to have at least 6–12 months' worth of expenses saved to cover unforeseen job transitions.
• Debt Management: Reduce high-interest debt to ensure financial flexibility if job changes occur.
• Diversified Income Streams: Explore freelance work, consulting, or investment opportunities to supplement your income.

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2. Investing for Retirement Security

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A key concern in the face of Trump plan for federal workers is long-term financial security. To safeguard your retirement:

• Maximize Contributions to the Thrift Savings Plan (TSP): Continue investing in both traditional and Roth TSP options to build a strong retirement fund.
• Consider Additional Retirement Accounts: Look into IRAs or employer-sponsored 401(k)s if transitioning to the private sector.
• Review Your Pension Plan: Understand your eligibility for FERS or CSRS benefits and how early retirement might affect payouts.
• Diversify Investments: Work with a financial advisor to ensure a balanced portfolio that aligns with your long-term retirement goals.

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3. Seeking Professional Consultation

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Consult a Financial Advisor Seeking professional help from advisors like Federal Pension Advisors can help:

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• Financial Advisors: They can provide insights on wealth management, tax planning, and retirement investments tailored to your specific situation.
• Career Coaches: If your role is at risk, career advisors can help you transition into the private sector or other federal roles.
• Legal Experts: If facing a reduction in force (RIF), legal professionals can help you understand your rights and benefits.

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4. Exploring Career Alternatives

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With Trump plans for federal employees reshaping the workforce, exploring alternative career paths is a smart move:

• Look for Internal Transfers: If your agency is reducing staff, see if you can move to another department with job openings.
• Develop New Skills: Take advantage of training programs, certifications, and online courses to improve your job market value.
• Network with Professionals: Leverage LinkedIn, industry conferences, and federal employee support groups to connect with potential employers.

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5. Preparing for Early Retirement

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For those considering early retirement due to federal employee layoffs, strategic planning is essential:

• Assess Your Eligibility: Check if you qualify for early retirement under FERS or CSRS.
• Optimize Pension Payouts: Understand how delaying benefits or choosing lump-sum options may impact your financial future.
• Calculate Healthcare Costs: Factor in health insurance needs post-retirement, as FEHB benefits may change if you leave federal service.

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Planning makes all the difference

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In this phase of federal employee layoffs, staying calm and making informed decisions is key. Explore your retirement options, assess your FERS or CSRS benefits, and diversify your investments for stability. Weigh early retirement against career transitions and consult financial experts to secure your future.

Schedule a consultation today to navigate these changes with confidence and peace of mind.

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