Federal Job Cuts Disrupt Stable Retirement for Many Workers, Including Black Americans

 Federal Job Cuts Disrupt Stable Retirement for Many Workers, Including Black Americans

The recent cuts to the federal workforce under President Donald Trump are throwing a wrench into the retirement plans of many workers, including those from marginalized communities such as Black Americans. The federal government has long been considered a stable employer, with generous benefits such as a defined benefit retirement package—a rarity in the corporate world. However, the recent layoffs have led some job-seekers to reconsider federal careers.

Impact on Black American Workers

Black Americans made up just under 20% of the federal workforce in 2021, according to a study by the U.S. Government Accountability Office. This is higher than their share of the overall civilian workforce, which stands at approximately 13%. Other groups with higher representation in the federal workforce include Native Americans and people with disabilities.

For many federal employees, such as Katrina Ayers, a 36-year-old African American mother of three who works as a technician for the National Guard, the federal job attracted them due to job security and healthcare benefits. "What attracted me was, of course, job security and the health insurance. That was the biggest thing. It was something that was stable," Ayers said.

The uncertainty brought by the recent federal workforce reductions, including layoffs of probationary employees, is now causing some to question their long-term career paths in government employment. Janine Wiggins, owner of Resumes by Neen, a job search coaching business focused on federal workers, has noted a shift in her clients’ attitudes. "There’s a lot of volatility now...Before, I would get a lot of clients who want to work for the government because they see it as somewhere where they can stay long-term and retire,” Wiggins shared.

Federal Retirement Benefits and Impact

Federal employees typically rely on a combination of three retirement programs: Social Security, the Thrift Savings Plan (a 401(k)-like program), and the Basic Benefit Plan (a pension). However, recent cuts have raised concerns over how these retirement plans will be impacted, especially for those who may not be able to stay long enough to retire as planned.

The Basic Benefit Plan's annuity is calculated using years of service and the highest average pay over three consecutive years. If employees are forced out of their positions, they may end up with lower retirement benefits than originally expected. Furthermore, employees who are separated before they are eligible for full retirement can receive a lump sum of their contributions.

The Thrift Savings Plan, although a stronger option than many private sector 401(k) plans, may still fall short of meeting the needs of workers relying on federal benefits for long-term financial security.

J. Mark Iwry, a senior fellow at the Brookings Institution, notes that while the federal pension plan adjusts for inflation, it still offers a somewhat lower benefit than private sector plans, which puts more stress on workers facing unexpected layoffs.

The Financial Strain on Minority Communities

The sudden need for federal workers to transition into new jobs could potentially force some to dip into their retirement savings, which would be a blow to those relying on their federal benefits for future financial security. Craig Copeland, Director of Wealth Benefits Research at the Employee Benefit Research Institute, pointed out that some lower-income individuals and families may face additional financial strain when supporting dependents, leaving less room to save for retirement.

"The wealthier individuals who are Black or Hispanic often feel a responsibility to care for loved ones, which limits their ability to save for retirement," Copeland said.

This disparity in wealth between Black and white workers is a persistent issue. Black households often have less exposure to the stock market, face barriers to homeownership, and deal with undervaluation of homes in communities of color. As a result, the wealth gap between Black and white savers continues to widen, impacting long-term retirement security.

The Future of Federal Workforce Cuts

While the full extent of the job cuts is yet to be fully realized, several legal challenges have already been filed against the Department of Government Efficiency, which is pushing for many of the layoffs. Some government agencies, like the FDA, have already backtracked on some cuts, suggesting that some of these positions may be reinstated.

For workers like Katrina Ayers, the uncertainty has raised concerns. "People make the country run. So you need people in place, and to lay off all these federal workers, I’m just not understanding the rhyme and reason why. I just feel like it’s going to be a domino effect," she said. Ayers remains hopeful about finding a job within the federal system, but she also has a backup plan in case she must transition into the private sector.

Looking Ahead

As the federal workforce faces more cuts and potential restructuring, the impact on retirement security for many workers—especially minority groups—will become more apparent in the coming months. For now, the future remains uncertain, and federal employees like Ayers continue to navigate this turbulent environment with cautious optimism about their career paths.