“Political alignment” could be the real indicator of labor market health in Washington, D.C., according to a recent report from Cushman & Wakefield.
The Trump administration has pushed ahead to reduce the federal workforce, which would strongly affect the need for office space in the nation’s capital and environs. Historical mechanisms could result in other parts of the labor market expanding. Unfortunately, conditions are more volatile than has been the case in the past, so forecasting the immediate future is still difficult.
Cushman’s approach is not to look at federal jobs in isolation, but at the dynamic of government and private sector together. The firm said federal job losses aren’t unusual and that there have been previous attempts to rein in the government workforce.
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Typically, this hasn’t been attempted, or at least targeted, on the scale of the current administration.
Department of Government Efficiency (DOGE) former co-leader Vivek Ramaswamy said before that the group looked to cut up to 75% of the jobs.
The firm looked at data from the Bureau of Labor Statistics and said that almost always, federal job losses were “offset by growth in federal contracting.” Often, agencies find that they still need people to get work done. Whatever is necessary may be beyond the ability of a significantly reduced workforce. Plus, payment to consultancies and contract agencies now come out of a different bucket. The official statistics still can look like there are far fewer workers, even though they come back in another form that doesn’t fall under headcount.
Cushman said that the most telling indicator of D.C. labor markets is “political alignment.”
“When the presidency is accompanied by control of the Senate and/or House of Representatives, bills and contracts can be passed more easily, leading to office-using job growth in the region,” it wrote. “The second Trump term will feature alignment of historic proportions with all branches of government – Executive, Legislative and Judicial are controlled by the Republicans / Conservatives. [That] is likely to further propel the regional economy.”
Then there is the question of how many employees will be left in the D.C. region and then how that aligns with reductions in leased real estate. Cushman & Wakefield wrote that the federal footprint of leased space has shrunk by 24% since 2012. The D.C.-based employment count is only 4,400 fewer than at that time.
However, current conditions are volatile. About 40% of federal leases in the D.C. metro area will expire during the current administration. Federal leases of more than 200,000 square feet are concentrated in the CBD, Southwest, and NoMA D.C. submarkets. Most agencies are looking for between 7% and 40% reductions with an average space reduction of 27%.
Still, it’s difficult to know at the moment how large the ultimate federal employee reductions might be. The Office of Personnel Management (OPM) and the Office of Management and Budget (OMB) has told agencies to draft and turn over plans for widespread layoffs by March 13, according to The Hill. The administration said OPM can cut the 60-day notification period in half.
“Pursuant to the President’s direction, agencies should focus on the maximum elimination of functions that are not statutorily mandated while driving the highest-quality, most efficient delivery of their statutorily-required functions,” the memo from the two agencies read.
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