Massive Treasury Department Layoffs Signal Deep Federal Job Cuts

Massive Treasury Department Layoffs Signal Deep Federal Job Cuts

2025-03-26 @ 14:31

Major Treasury Department Layoffs Signal Broader Federal Workforce Reductions

The U.S. Treasury Department is preparing for a significant downsizing, following the Trump administration’s broader initiative to reduce the federal workforce through the Department of Government Efficiency (DOGE). As part of this effort, thousands of federal employees will be impacted, with a particular focus on new hires and probationary workers.

Treasury Department Layoff Details

The layoffs at the Treasury Department will be executed across various bureaus, relying on formal reductions in force (RIFs). According to senior HR official Trevor Norris, the job cuts will primarily affect newer employees who were recently reinstated under a court order. These workers, currently on probationary status, will likely be among the first to be dismissed.

Layoffs Across Multiple Federal Agencies

The Treasury Department is just one part of a much larger effort to cut tens of thousands of federal jobs. Since the start of Trump’s second presidency, multiple agencies have announced layoffs affecting various sectors.

Key departments impacted by the federal workforce reduction:

Department of Defense: Plans to cut 5,400 probationary employees and impose a hiring freeze, with an overall goal of reducing the civilian workforce by 5-8%.

Department of Agriculture: Approximately 5,600 employees have been fired, affecting critical agencies such as the Natural Resources Conservation Service and the U.S. Forest Service. These cuts may critically impact wildfire prevention, agricultural research, and conservation efforts.

Department of the Interior: Around 2,300 positions have been eliminated, particularly affecting the Bureau of Land Management and the National Park Service. These reductions have raised concerns about maintaining public lands and national parks.

Department of Veterans Affairs: More than 1,000 probationary employees, including key researchers, have been dismissed, potentially impacting veteran healthcare services.

IRS Job Cuts and the Impact on Tax Revenue

The IRS faces some of the most significant reductions, with an estimated 6,700 newer employees facing dismissal and 4,700 longtime employees opting for voluntary departures. Additional layoffs of 6,800 employees could reduce the IRS workforce by 20%.

Potential consequences of these IRS layoffs:

Decreased enforcement of tax regulations may make it easier for wealthy individuals to avoid paying taxes.

Federal revenue losses could reach $500 billion over the next decade.

A predicted loss of $1.7 billion in 2025 and $65.8 billion from 2025-2034 due to weakened tax collection efforts.

Market and Economic Impact

These federal layoffs are not just affecting government workers—they are also shaping the broader economic landscape. The Treasury Department’s focus on increasing disbursement rates for non-tax-related payments and lowering 10-year bond yields is directly influencing the financial markets.

Key economic effects of federal workforce reductions:

Treasury Secretary Scott Bessent’s strategic efforts have resulted in a half-percentage point drop in bond yields over the past two months.

Investors have shifted towards bonds due to Trump’s tariff policies and trade threats, further reducing yields.

The shrinking IRS workforce threatens long-term economic stability by reducing tax revenue and increasing the budget deficit.

Union Response and Contractual Challenges

The National Treasury Employees Union (NTEU) has strongly opposed the planned layoffs, citing labor contracts that require mitigation strategies to minimize the impact on affected workers. IRS reduction-in-force (RIF) policies state that:

Employees must receive adequate notice before termination.

The IRS must offer voluntary separation incentives and reskilling programs.

No employee can be involuntarily dismissed within 12 months of the union being formally notified of layoffs.

As the Trump administration pushes ahead with its sweeping federal workforce downsizing, the implications for agencies, employees, and financial markets remain uncertain.