Story Highlights
- The Trump administration’s federal workforce reforms have cost the U.S. economy an estimated $165.6 billion, according to a new Partnership for Public Service analysis
- Nearly $53.2 billion of these costs stem from disengaged civil servants, calculated using Gallup data showing disengaged employees cost their organizations 34 percent of their salaries
- Additional costs include $4.5 billion in salary and benefits for employees on the deferred resignation program, $443.9 million for employees on administrative leave during legal challenges, and $763.9 million in severance payments
What Happened
The Partnership for Public Service, a nonpartisan good government organization, released a comprehensive analysis documenting the economic impact of Trump administration workforce policies. The analysis examined multiple categories of federal workforce management decisions made since the administration took office, including reductions in force, the deferred resignation program, severance payments, and administrative leave costs. The organization compiled data from government sources, congressional reports, think tanks, news articles, and its own internal research to quantify the economic impact of these workforce decisions.
Max Stier, president and CEO of the Partnership for Public Service, characterized the findings as contradicting administration claims about reducing waste. “This is an administration that has claimed that it is trying to reduce waste, and yet the choices that it has made have created phenomenally larger waste,” Stier said during a press call presenting the analysis. The report calculated that the largest single cost component stems from disengaged federal employees. Using research from Gallup demonstrating that disengaged employees cost their organizations approximately 34 percent of their salaries in lost productivity, the Partnership estimated that federal employee disengagement accounts for nearly $53.2 billion in economic losses.
The analysis documented several additional cost categories. Federal employees who took the Trump administration’s deferred resignation program cost the government approximately $4.5 billion in salary and benefits while they were not working. The program offered employees financial incentives to resign, yet the employees remained on payroll during notice periods, representing a complete loss of productive capacity. Additionally, the government spent an estimated $443.9 million to pay probationary employees on administrative leave while legal challenges to their terminations were resolved in court. These individuals remained on the federal payroll despite being prohibited from working, creating a complete loss of productivity while legal disputes proceeded.
The administration also expended $763.9 million in severance payments to employees removed through reductions in force between January 2025 and January 2026. Approximately 10,400 employees were removed through various RIFs, generating substantial severance costs. Beyond these direct costs, the administration has implemented a pay freeze for federal civilian employees, creating further disengagement among remaining workers. While military personnel receive raises between 5 and 7 percent annually, civilian federal employees face a complete freeze on compensation increases, deepening morale and engagement problems.
Why It Matters
These costs raise fundamental questions about administrative competence and governance. When an administration claims to focus on reducing waste while creating massive economic waste, it undermines credibility and suggests poor policy judgment. The administration’s approach appears to prioritize ideological objectives—reducing federal workforce size and dismantling civil service protections—over practical fiscal management. The net economic impact is demonstrably negative for American taxpayers who bear the costs of these decisions.
For constitutional governance and separation of powers, the workforce overhaul raises concerns about executive power. The administration has pursued major personnel changes unilaterally, without congressional authorization or appropriations direction. While Congress appropriated funds for federal programs and the personnel to administer them, the administration cut personnel without congressional direction, essentially rescinding congressionally appropriated funds. This represents an assertion of executive power that arguably exceeds constitutional bounds and violates the principle that Congress controls federal spending through appropriations.
For government effectiveness and public welfare, the disengagement among federal employees has serious implications. When 34 percent of an employee’s compensation value is lost to disengagement, productivity declines dramatically. This affects the federal government’s capacity to administer programs, process applications, conduct inspections, respond to emergencies, and provide services that Americans depend upon. The infrastructure for government effectiveness—expertise, institutional knowledge, trained personnel—is being degraded at substantial cost.
Economic and Global Context
Federal workforce costs represent a significant portion of federal discretionary spending, with approximately 2.3 million civilian federal employees on payroll. The Trump administration in 2025 cut more federal employees in a single year than at any point since the drawdown after World War I. Between January 2025 and January 2026, the civilian federal workforce shrank by approximately 130,000 employees. This represents a reduction exceeding 5 percent of the total federal civilian workforce in a single year.
The administration’s FY 2027 budget proposal continues its workforce reduction trajectory. The budget includes a pay freeze for civilian federal employees while proposing raises of 5 to 7 percent for military personnel. The budget document explicitly describes workforce reduction as a strategic objective, stating that the budget “shrinks the government by eliminating woke, weaponized and wasteful programs and funding, downsizing the federal workforce and optimizing federal real estate.” This signals that the administration intends to continue aggressive workforce reduction policies throughout Trump’s term.
The economic impact extends beyond direct federal employment costs. When the federal government loses experienced employees and fails to replace them, agency capacity diminishes. The EPA cut 4,000 employees—24 percent of its workforce—between January 2025 and January 2026. The Office of Personnel Management, responsible for civil service oversight, has been decimated. Other agencies have similarly experienced dramatic personnel losses. These capacity reductions translate into delayed approvals, reduced inspection activities, slower response times, and diminished government effectiveness across all sectors where federal agencies operate.
Implications
For federal employees, the workforce overhaul represents existential uncertainty. Even employees not yet affected by workforce reductions face potential conversion to Schedule Policy/Career status, which would strip civil service protections and make them effectively at-will employees. This uncertainty creates the chilling effect documented by the disengagement analysis. Talented federal employees are departing government for private sector positions, representing a permanent loss of expertise and institutional knowledge that cannot be quickly replaced.
For Congress, the analysis raises questions about whether the administration is violating congressional spending authority. If Congress appropriated funds for federal programs and the personnel needed to administer them, the administration’s unilateral decision to eliminate positions may violate congressional prerogatives. Congress retains authority over federal spending and could potentially challenge executive branch assertions of authority to rescind congressionally appropriated funds.
For government performance and accountability, the workforce reduction strategy appears counterproductive. Rather than creating a more efficient government, the approach has created massive economic waste while simultaneously reducing government capacity to serve the public. Federal agencies responsible for environmental protection, food safety, occupational safety, tax collection, and numerous other critical functions have been degraded in capacity. The costs documented in the Partnership analysis suggest that the administration’s workforce strategy should be evaluated not as an efficiency measure but as an enormous fiscal failure.
Sources
“Trump’s federal workforce changes cost the economy more than $165.6B, analysis finds”
