Most children do not dream of a future spent working in a government office.
Imagine being an average high school student without a clear academic direction. Your guidance counselor advises that college graduates typically earn more over their lifetimes compared to those who only finish high school.
In light of this, you decide to attend your local state university, choosing a major in history, sociology, or psychology. Yet, you remain uncertain about what you wish to pursue after graduation. Your uncle suggests that government jobs offer stability, better benefits, and assured retirement plans.
After earning your degree, you find yourself employed by the Bureau of Land Management, the Department of Education, the Internal Revenue Service, or the Environmental Protection Agency—one of those federal entities that oversee laws established decades ago. You learn the ins and outs of the job and feel satisfied being part of something larger than yourself.
However, about ten years into your career, as you climb up the ranks, a realization strikes: your work is largely trivial and unfulfilling—a total waste of your time and energy.
By this point, though, you feel trapped. Switching careers seems daunting, especially since your federal job offers attractive pay, a manageable workload, and the responsibility of supporting a mortgage and family. You take solace in the thought of a plush retirement after 35 years.
The years roll by, and you find yourself counting down the days until you can enjoy those cozy winters in Florida.
But then, disaster strikes…
You’re Fired!
In comes Trump, a surprise victor in the 2024 Presidential election. Despite facing numerous obstacles and fierce opposition from mainstream media, he secures the win.
This Trump is unlike the one from years past; he is determined to make significant changes.
With tech mogul Elon Musk and a cadre of computer experts on his team, the new administration sets out to eliminate wasteful spending within the federal government. Before you know it, Musk targets your position.
Weeks pass, and you receive an email from Musk’s DOGE, demanding your resignation or face termination. A subsequent Saturday message requests five bullet points detailing your weekly achievements.
Finally, days later, you get an email notifying you of your termination. You’re instructed to collect your belongings and leave. What now?
You return home, refresh your resume, and browse job postings on LinkedIn and Indeed. Unfortunately, your civil servant skill set doesn’t translate well into private sector roles. Moreover, positions like administrative billing at United Healthcare offer roughly 60% of your previous salary.
In the DC metro area, many of your neighbors are in the same boat; the competition for available jobs is intense.
Your applications often go unanswered. When they do reply, it’s typically just a generic message indicating that they’re reviewing applications and you might hear back in four to six weeks.
Distortions
New “For Sale” signs appear in your neighborhood with alarming frequency. You start to wonder if it’s time to list your own home and at what price.
‘Where did I go wrong?’ you ponder. ‘I followed the advice I was given, yet after 20 years, my stable job has vanished.’
Life doesn’t always go according to plan. Unexpected events occur, and sometimes things unravel.
Many longtime federal employees are finding themselves ensnared in circumstances beyond their control. The illusion of a secure job has shattered, and the gravy train has ended. They now face the daunting task of starting anew under more challenging conditions.
The time to address America’s bureaucratic excess was long overdue. Instead of reducing, government employment has inflated alongside increasing debt. Trump’s administration is attempting to rectify what should have been addressed years ago.
These former federal employees will soon grapple with the realities faced by those in the private sector: competition, job instability, and salaries tied to profitability.
For decades, we’ve seen a severe misallocation of financial resources. Government spending has led to substantial economic distortions, supporting countless jobs and programs that were never viable and were sustained by unsustainable debt. As these jobs disappear, a painful adjustment is inevitable. While this shift may ultimately stabilize the economy, the short-term effects will be harsh.
Federal Workers Sing the Blues
Despite Trump’s presidency, it seems unlikely that Washington will find the determination to eliminate the deficit. Nonetheless, the layoff of many federal workers could have considerable effects on regions densely populated with government agencies.
Generally, federal employee incomes exceed average salaries. As these workers transition from stable paychecks to unemployment, local consumption will likely decline. Businesses dependent on the spending power of federal employees—such as restaurants, coffee shops, dry cleaners, and retailers—will feel the impact.
Moreover, with job security in limbo for both public and private sector positions, many consumers will tighten their budgets. This decline in consumer spending will stifle economic growth, leading to further job losses, which in turn reduces consumer expenditure. The cycle continues.
All of this unfolds at a time when stock prices are inflated. It’s not just technology stocks that are overpriced; the shares of consumer goods companies are also at unsustainable levels.
Take Costco, for example. The company’s share price hovers around $1,021, down from $1,078 in recent weeks.
Five years ago, Costco shares were priced at $281. Despite the recent drop, they have increased over 263% in that period. Year-to-date, they’re up more than 12%. However, the price-to-earnings ratio is alarmingly high at 60, and it offers a meager dividend yield of 0.44%.
Costco reported net sales of $249.6 billion for FY2024, up from $163 billion in FY2020. This represents a commendable 53% growth over four years. Yet, such growth does not justify a 263% increase in share price.
If Costco’s net sales plateau or decline, what will become of its stock price?
We might soon find out. There are significant distortions in need of correction in the market. Costco is just one example of this trend.
When the anticipated downturn comes, it promises to make history.
[Editor’s note: It’s increasingly clear that the U.S. economy is heading toward a recession. We anticipate that this downturn will be particularly harsh for workers, savers, and retirees. >> Act now with this Recession Recovery Kit!]
Sincerely,
MN Gordon
for Economic Prism
Return from Federal Workers Sing the Blues to Economic Prism
