Trump Administration Orders Unprecedented Federal Workforce Layoffs—What Happens Next?

Photo by Chris Grafton

The Trump administration has officially directed federal agencies to prepare for mass layoffs, marking a historic and controversial shift in government workforce management. With a mandate to submit their initial reduction plans by mid-March, agencies must now determine which positions will be eliminated. By September, thousands of federal employees could find themselves out of work.

This move follows the administration’s voluntary buyout program, which saw 75,000 government workers accept offers to resign with full pay and benefits through September. However, the administration had initially aimed to cut 5-10% of the federal workforce, meaning at least 125,000 more jobs were expected to be eliminated. Falling short of that target, the administration is now poised to enforce workforce reductions through layoffs.

For those who stayed, the future is uncertain. The Department of Government Efficiency (DOGE), led by Elon Musk, has already begun auditing agencies, forcing employees to justify their roles or risk termination. Thousands of probationary workers were already cut in February, and reports indicate that permanent employees may be next.

What This Means for Federal Employees

This level of federal downsizing is unprecedented. While past administrations have used hiring freezes and early retirement incentives to reduce government payrolls, no president has ever ordered large-scale layoffs in such a structured and accelerated manner.

“Federal employees were led to believe these buyouts were a way out, but for many, it’s turning into a financial nightmare,” says Michael A. Scarpati, CEO of RetireUS. “Some workers walked away with a lump sum, only to realize it wasn’t enough to sustain them. Others are facing tax bills they didn’t expect. And those who stayed? They’re now waiting for the axe to fall.”

With agencies tasked with submitting both initial layoff plans by March 13 and finalized cuts by April, the timeline for government downsizing is moving faster than many expected. DOGE has already begun auditing federal departments, classifying workers as either “mission-critical” or “non-essential.” Employees have been instructed to submit weekly reports justifying their jobs, adding another layer of scrutiny to an already uncertain environment.

The Financial Implications of Mass Layoffs

For those still in their roles, financial planning is now critical. Employees are being urged to evaluate their pensions, Thrift Savings Plan (TSP) rollovers, and federal health benefits before any unexpected terminations.

“The federal workforce is shrinking, and those left behind need to get their financial ducks in a row—fast,” says Scarpati. “Whether someone took the buyout or stayed in their role, the best way to navigate this transition is with informed financial planning.”

Many workers who accepted the buyout are now realizing that their pension and retirement savings may not stretch as far as they hoped. Others who declined the buyout, thinking their jobs were secure, are now at risk of layoffs that could come with fewer benefits than voluntary resignations.

Scarpati emphasizes that employees need to act quickly to assess their financial stability before major cuts take effect. Experts suggest:

• Evaluating TSP rollovers to avoid high tax penalties.

• Understanding pension reductions for those who separate early.

• Reviewing federal health insurance policies, which may shift as agencies downsize.

• Exploring alternative employment options in case of job loss.

What Comes Next?

The administration’s broader workforce reduction plan remains unclear, but experts expect a mix of forced resignations, restructured departments, and outright terminations. Employees in non-security-related positions may be at the greatest risk, particularly in agencies deemed “redundant” by DOGE.

As federal workers brace for further changes, financial advisors, legal experts, and worker advocacy groups are stepping in to help employees understand their rights and options. While the administration argues that layoffs will increase efficiency and reduce waste, critics warn of potential disruptions in government services, lawsuits from impacted employees, and long-term economic consequences.

One thing is certain: the federal workforce is facing its biggest shake-up in modern history. For government employees, financial preparedness and strategic decision-making will be key to surviving the months ahead.