Jobs Got Scarcer In February Amid Tariff, DOGE Turmoil

The U.S. job market faced significant turbulence in February, as the Trump administration's tariff policies and the Department of Government Efficiency (DOGE) initiatives created a perfect storm of uncertainty. The combination of these factors led to a notable decline in job openings and an increase in layoffs, raising concerns about the broader economic outlook.



The Labor Department's Job Openings and Labor Turnover Survey (JOLTS) reported a drop of 194,000 job openings to 7.568 million by the end of February. This decline was attributed to rising uncertainty over the economy due to tariffs on imports, which curbed demand for labor. Layoffs also increased by 116,000 to 1.790 million, further exacerbating the job market's woes. Economists had forecast 7.61 million unfilled positions, but the actual numbers fell short of expectations, indicating a more challenging labor landscape.

The tariff policies implemented by the Trump administration had a mixed impact on the job market. While sectors like steel saw a boost in jobs due to increased domestic production, other industries faced higher input costs and reduced competitiveness. For instance, steel tariffs raised production costs for the manufacturing sector and other steel-intensive U.S. industries, leading to job losses in these areas. A study by Lydia Cox found that steel tariffs imposed by former president George W. Bush in 2002-03 were responsible for 168,000 fewer jobs per year in steel-using industries, on average—more jobs than there are in the entire steel sector. This highlights the collateral damage caused by tariffs, where the benefits to one sector can lead to job losses in others.

The DOGE initiatives, aimed at downsizing the federal government, also contributed to the job market's turmoil. The culling of government programs and agencies resulted in an unprecedented wave of federal workers joining the ranks of job seekers. Data from Indeed shows that job applications from federal workers at DOGE-affected agencies spiked in February and were 75% above 2022 levels. This surge in job applications indicates a significant increase in unemployment claims from federal workers, with the Labor Department reporting that more federal workers are filing for unemployment than in the past. For instance, the number of federal workers who filed initial claims under the Unemployment Compensation for Federal Employees program totaled 821 for the week ended March 15, down from 1,066 filings the week before. This trend suggests that the DOGE initiatives are leading to job losses in the federal sector, which could have ripple effects on the broader economy.

The uncertainty surrounding President Trump's economic policies is also contributing to reduced hiring in white-collar sectors. Indeed economist Allison Shrivastava describes the labor market as "a little bit frozen" but currently stable. This uncertainty is likely to slow down hiring, especially for specialized and white-collar roles, which could further exacerbate the unemployment situation. The Labor Department data shows that initial claims for unemployment benefits remain steady with 224,000 initial claims filed last week, indicating that the labor market is stable but cautious.

The DOGE initiatives could lead to a reduction in government spending, which could have a negative impact on the broader economy. The Trump administration's tariff policies, for example, have been criticized as inflationary and harmful to the economy. Economists have become more concerned that consumers, facing price increases on many products, will cut back on spending, undercutting an important pillar of the economy's health: consumer spending is the main engine of economic growth, making up 68% of the Gross Domestic Product. The latest data highlights the seismic impact that Trump's continually shifting tariff policies have had on the economy in recent weeks. Economists have become more concerned that consumers, facing price increases on many products, will cut back on spending, undercutting an important pillar of the economy's health: consumer spending is the main engine of economic growth, making up 68% of the Gross Domestic Product. This could lead to a slowdown in economic growth and potentially a recession.

In conclusion, the job market faced significant challenges in February due to the Trump administration's tariff policies and the DOGE initiatives. The decline in job openings, increase in layoffs, and uncertainty surrounding economic policies have created a challenging environment for job seekers. It is important for policymakers to consider these potential long-term effects when implementing such initiatives.