Thousands of laid-off government workers are flooding a shrinking job market

Thousands of private government consultants laid off during the Trump administration’s cost-cutting crusade are increasingly flooding a shrinking labor market. 

Job postings among seven of the 10 consulting companies singled out by the General Services Administration for contract cuts are down about 27% since 2023, and about 11% from a year ago, according to data scraped from job boards by labor market analytics firm Lightcast.

Booz Allen Hamilton Holding Corp. and Deloitte LLP had almost 1,200 and 8,200 fewer openings than last year, respectively, Lightcast data showed. Both announced job cuts this quarter.

“The job market is certainly not great for these people,” said Ron Hetrick, Lightcast’s principal economist. “If they lay off people, they’re probably not going to backfill them.”

Federal government employment shrank by 22,000 in May, bringing jobs lost since January to 59,000, according to the latest jobs report. That excludes those on paid leave or receiving ongoing severance pay. About 75,000 workers took an initial federal buyout deal that will pay them until September, with thousands more in another round of offers.

Recruitment company Beacon Hill has seen “a noticeable increase” in job seekers from the federal space in the first two quarters of the year because of job cuts and internal reorganizations, said Kim Ayers, a regional director who oversees the group’s government services business.

In response to queries about job cuts, Booz Allen referred to comments made during a recent earnings call, where Chief Operating Officer Kristine Martin Anderson said the company expects to “add significant headcount in the second half of the year.” Deloitte said it had nothing more to add to the statement it made in April, when it said it was “taking modest personnel actions based on moderating growth in certain areas, our government clients’ evolving needs, and low levels of voluntary attrition.”

Government contractors support public workers in a wide range of tasks, from producing content and developing software to helping draft regulations and handling administrative tasks. There were about 4.6 million contract workers at the start of this year, the Federal Reserve Bank of Atlanta estimates, compared with 2.4 million directly employed by the federal government, excluding active duty military personnel, postal employees and temporary census workers. 

Job postings in Washington, DC, which has the largest concentration of federal workers, were down 17% in April versus Jan. 20, job portal site Indeed found. The biggest declines were in administrative assistance, human resources and accounting positions, typical functions in public agencies.  

Specifically, management consulting job postings in the Washington metro area fell 28% between February and May, Lightcast data showed.

While hiring is down, “it’s not non-existent,” Hetrick said in an interview. Companies are looking for individuals with skills to help them effectively use artificial intelligence. This may explain the 171,000 increase in job openings in professional and business services from March to April, according to Bureau of Labor Statistics data, even with 82,000 job cuts during the same period, he said. 

Some targets of federal contract cuts, including Accenture Plc and International Business Machines Corp., are hiring more than they did last year, Lightcast data showed.

Outside of federal services, demand remains strong for talent in areas such as health care, cybersecurity, artificial intelligence and machine learning, said Emma Long Garber, a vice president overseeing sales and delivery in the Mid-Atlantic for employment company Insight Global. 

Hiring could pick up if the Federal Reserve cuts interest rates, boosting business activity, according to Hetrick. 

“It would be very difficult to sell your shareholders on why you would be hiring right now,” he said. “But it could improve. Policies change.”

This story was originally featured on Fortune.com