Trump Memo Heard Around The World: How US Economy Could Adjust To Buyouts For Federal Workers

The Trump administration's Tuesday memo, titled "A Fork in the Road,” is being viewed as a move to push career federal workers out of their jobs and, observers say, replace them with loyalists, noted Axios, which first reported this story.

The memo, sent by email, told federal employees they have until Feb. 6 to choose whether to participate in a “deferred resignation program” that would allow them to decide now that they will resign in September.

"Between the flurry of anti-worker executive orders and policies, it is clear that the Trump administration's goal is to turn the federal government into a toxic environment where workers cannot stay even if they want to," said Everett Kelley, president of the American Federation of Government Employees in a statement reported by the Associated Press.

“If you resign under this program, you will retain all pay and benefits regardless of your daily workload and will be exempted from all applicable in-person work requirements until Sept. 30, 2025 (or earlier if you choose to accelerate your resignation for any reason),” the email stated. An IRS employee in Kansas City told Benzinga she received her email at around 7 p.m. ET Tuesday evening.

The federal government employed more than three million people as of November 2024, which accounted for nearly 2% of the nation's entire civilian workforce, according to the Pew Research Center. Not counting the Postal Service, there are more than 2.4 million federal workers, which makes the federal government the nation's single largest employer, with even more workers than Walmart, Amazon or McDonald's.

"Even a fraction of the workforce accepting buyouts could send shockwaves through the economy and trigger widespread disruptions throughout society as a whole, triggering wide-ranging — and as yet unknowable — implications for the delivery, timeliness and effectiveness of federal services across the nation," notes the Pew report.

While President Donald Trump vowed to disrupt Washington with the help of the Department of Government Efficiency headed by Tesla CEO Elon Musk, the buyout orders, if undertaken, could have immediate negative effects on key sectors in the U.S. economy.

For example, contractors and IT services that provide defense solutions to the government such as Leidos Holdings, Inc. LDOS, Booz Allen Hamilton BAH and General Dynamics Corp GD could be affected. Northrop Grumman Corp NOC, a defense and aerospace contractor, and Lockheed Martin Corp LMT could benefit if these federal functions are outsourced.

The financial and banking sector should experience some changes. JPMorgan Chase & Co JPM and Bank of America Corp BAC to mention just two, could be impacted by lending, mortgage markets and consumer spending.

Speaking of consumer spending and, judging from Pew's graph of where government workers are employed, retail giants such as Walmart Inc WMT, Target Corp TGT Amazon.com Inc AMZN and Home Depot Inc HD could feel the pinch as shoppers in areas with large government employment tighten their belts.

Pew points out that, fewer than a fifth of federal workers work in or near Washington, D.C. as many might presume. California and Texas have the largest contingents of federal employees and 30,800 federal employees work overseas.

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