Last week saw a decline in applications for unemployment benefits in the United States, indicating a robust labor market even as federal government job reductions loom. According to the Labor Department, the number of people applying for jobless benefits dropped by 21,000 to 221,000 for the week ending March 1. This figure is notably lower than the 236,000 predicted by analysts.
Jobless benefit applications are widely regarded as a measure of layoffs, typically fluctuating between 200,000 and 250,000 over the years. The four-week average, which helps smooth out weekly variations, saw a slight increase of 250 to 224,250.
Some experts suspect that recent layoffs announced by the Department of Government Efficiency will be reflected in upcoming reports. Earlier this week, it was revealed by individuals close to the situation that the IRS is preparing to potentially reduce its workforce of 90,000 by half, employing methods such as layoffs, attrition, and buyouts. These sources requested anonymity as they are not authorized to disclose the details.
These layoffs come as part of the Trump administration’s initiative to reduce the federal workforce, an effort spearheaded by the Department of Government Efficiency. In February, about 7,000 probationary IRS employees with less than a year of service were dismissed.
Recently, senior officials in the U.S. administration initiated a push towards significant federal downsizing, attempting to curb the federal workforce. As stated in a recent memo, thousands of probationary employees have been let go, with future measures expected to target career employees with civil service protection.
Government agencies have been tasked with submitting their downsizing plans by March 13, a procedure that could lead to workforce reductions and outright elimination of positions.
The labor market, despite facing some challenges over the past year, remains largely healthy with numerous job opportunities and limited layoffs. In January, U.S. employers added 143,000 jobs, a decrease from December’s 256,000 job growth. Nonetheless, the unemployment rate edged down to 4%, reflecting a robust job market.
While layoffs are low from a historical perspective, several prominent companies have already enacted job cuts in 2025. This group includes Workday, Dow, CNN, Starbucks, Southwest Airlines, and Facebook’s parent company, Meta.
The total number of Americans receiving unemployment benefits increased by 42,000 to reach 1.9 million for the week ending February 22.
