As Trump prepares for his second term and the Department of Government Efficiency (DOGE) is effectively in place, significant layoffs of federal employees are on the near horizon. This represents just the initial phase—the ensuing consequence will be an intense competition for talent within the private industry.
It won’t be much longer before skilled professionals from the public sector begin exploring roles in the private sector, initiating shifts in recruitment strategies, compensation structures, and workforce interactions in sectors that are already under pressure. Here’s an examination of what federal downsizing may signify for both industries and individuals—with expert perspectives included.
Prospects in a streamlined workforce
All parties have something to gain or contemplate regarding the impending migration.
To start, the government. Alongside his co-leader Vivek Ramaswamy, Elon Musk, appointed by Trump to oversee DOGE, has vowed to enact comprehensive reforms: trimming federal jobs and curtailing wasteful expenditure. Musk has asserted the possibility of slashing the federal budget by $2 trillion, approximately one-third of the yearly federal spending.
Though this appears drastic, numerous studies have highlighted the performance improvements associated with downsizing.
The reform initiatives in New Zealand during the late 20th century, referred to as the New Public Management model, exemplify how delegating authority and establishing performance-based budgeting can enhance accountability, support cost-effectiveness, and yield tangible benefits for citizens.
Research conducted by Karthik Muralidharan and Venkatesh Sundararaman regarding contract educators in India also indicates that diversifying staffing—like employing contracted personnel to fill voids caused by budget constraints or staffing caps—can lead to substantial savings while enhancing student outcomes.
Provided that DOGE’s ambitious objectives navigate the obstacles of congressional funding—historical hurdles that hampered similar initiatives during Reagan’s presidency—this could signify a notable advancement toward governmental efficiency.
However, a thinner government attained through downsizing, unless accompanied by appropriate support mechanisms, might result in undesirable outcomes, such as heightened job instability. Considering this, it’s pertinent to examine the potential ramifications of displacement on government employees.
Not every displaced worker is destined for failure
The consequences for displaced individuals vary in complexity. Some may seamlessly transition, while others might face challenges due to different expectations and workplace environments.
For instance, the private sector thrives on a results-oriented culture, which contrasts with the bureaucratic nature of the public sector, as mentioned by Clark Lowe, CEO of O’Connor Company. Consequently, the competitive atmosphere in the private realm may prove challenging for public sector professionals who are used to a more stable, predictable pace.
Sherry Fitzpatrick, HR director at Taunton Village Dental, shares a similar viewpoint. She observes that the difficulties of switching to the private sector—including the loss of seniority-based security and predictable pay increases—could lead to income stability concerns for displaced public employees. Additionally, Fitzpatrick adds that starting over at mid or entry-level positions could be disheartening, given their extensive experience.
“Acknowledging the challenges faced by those affected during this period is essential,” affirms Theresa Payton, the first female chief information officer at the White House and now CEO of Fortalice Solutions.
The erosion of institutional knowledge and the impact on morale for remaining employees are significant concerns, according to Payton. Consider this—when a public worker departs, they typically carry a wealth of unwritten knowledge, developed relationships, and effective shortcuts. It’s akin to losing a “mental map” that takes years to establish in a new context.
Despite the immediate hurdles, Payton highlights that this displacement could pave the way for new career trajectories that promise long-term benefits.
Public sector abilities, private sector advantages
Public sector positions are often lauded for their job security and extensive benefits, yet the private sector frequently appeals to those motivated by financial incentives and opportunities for professional growth.
The silver lining here: current statistics indicate that the tech, healthcare, and education industries are actively hiring, with roles in high demand that align well with the core competencies of former public sector employees—such as compliance, cybersecurity, and organizational skills.
This escalating demand presents a unique advantage for private industry, which could benefit greatly from the comprehensive knowledge of agency operations that ex-federal workers possess.
As Paul L Gunn Jr., founder of KUOG Corporation, explains, the insight federal employees bring to private enterprises dealing with government agencies is invaluable. For instance, their familiarity with intricate regulations like the Federal Acquisition Regulation equips organizations to effectively compete for contracts and meet the needs of government clients.
Healthcare technology is another promising area, particularly as the field undergoes a substantial digital transformation, states Tony Holmes, practice lead for public sector solutions architects at Pluralsight. This burgeoning market is ripe for former government IT personnel with expertise in security and compliance. “At present, the technology sector faces a critical labor shortage, and this migration of talent could help relieve pressure points,” Holmes asserts.
For professionals weary of shifting from one employer to another, entrepreneurship presents a viable avenue to explore.
“When I left my role at the White House, I found myself at a crossroads that demanded profound consideration,” says Payton. “The options included entering the private sector, pursuing academia, or launching my own venture.” Ultimately, Payton chose the latter. “I identified a market need for human-centered design in technology innovation and cybersecurity solutions. Driven by a commitment to leverage my cybersecurity knowledge to safeguard individuals and organizations, I founded Fortalice Solutions.”
Beyond merely altering one’s environment, transitioning between sectors offers an opportunity to inject specialized skills into industries eager for innovation. Nevertheless, for this talent transition to thrive, organizations must adapt to the complexities of a broader, more diverse workforce, which may prompt adjustments in pay structures and even corporate culture.
Evolving dynamics after the transition
The value of talent is recognized, which is why remuneration could become a major point of contention during shifts between sectors, according to Lowe.
This applies equally to retirement schemes, which vary greatly: private sector staff generally depend on 401(k) systems, whereas federal employees enjoy pensions. The structural differences in these systems can result in significantly different implications for long-term financial security for workers.
Union representation may also come into play, as noted by Lowe. Many federal workforce members are unionized, and their movement to the private sector could potentially lead to increased costs and disruptions for businesses.
While competitive pay is vital, attracting and retaining public sector talent demands more than that. For example, clear job definitions are essential, points out Fitzpatrick, especially given that federal employees are accustomed to a highly structured atmosphere with distinctly defined roles. They must be assured that their expertise will be acknowledged for its unique value.
Additionally, frustrations stemming from bureaucracy and micromanagement in federal roles need to be addressed, emphasizes Holmes. Providing autonomy and trust is crucial. It conveys that employees’ expertise and decision-making capabilities are respected, facilitating smoother transitions for government workers moving into corporate positions.
What private sector veterans should anticipate
The influx of government talent may present a double-edged sword for established private sector professionals.
On the upside, the infusion of qualified workers might enrich the talent pool and foster innovation within organizations. Conversely, concerns may arise regarding job competition, particularly if the displaced workers are inclined to accept lower salaries.
However, Chris Coligado, executive vice president and federal business lead at Fedstack, asserts that the integration of former public employees into the private sector is unlikely to undermine existing private sector professionals.
Rather, their incorporation is likely to enhance complementary capacities within current teams. Former federal staff can offer unique insights into mission-oriented operations, though they may require training or upskilling in private sector-specific areas—such as marketing or sales—to excel in their new roles.
Moreover, employees in the private sector stand to gain from this collaboration as well, as it may expose them to skill-enhancing opportunities in public sector-dominant fields such as cybersecurity and compliance.
Holmes suggests that this merging could yield a mutually beneficial scenario.
“The cross-pollination of skills can reinforce teams, with private sector workers gaining from the profound regulatory and process-oriented insights of their new colleagues,” explains Holmes. Meanwhile, former federal employees can adapt to the private sector’s fast-moving and innovation-centric ethos—an environment that sharpens their skills without demanding cutthroat competition.
Transforming public careers
While a leaner governmental structure might appear advantageous, the public sector could find itself enmeshed in a classic conflict between productivity and the previously esteemed stability of government roles—where a more efficient and streamlined approach may compromise the very elements that made these careers appealing.
Typically regarded as stable, government employment offers prospects for long-term careers that compensate for lower remuneration, states Coligado. Nevertheless, shifts in the landscape—such as Schedule F, which seeks to redefine civil service roles to allow for politically motivated hiring and firing practices—could jeopardize the job stability traditionally associated with public sector employment.
With the federal workspace increasingly perceived as transactional, employees are coming to terms with the reality that their positions could be influenced by political and departmental alterations. In this evolving environment, unions—which historically represented security—might struggle to provide the safeguards they once did.
If benefits and job security continue to diminish, Coligado warns that the federal sector will need to reassess its strategies in order to remain competitive. Federal compensation must rise to align with private sector benchmarks, as the longstanding equilibrium between stability and lower wages is losing its appeal.
In agreement, Holmes cautions that, over time, the perception of instability might “broaden the talent gap” in public service, as uncertainties could lead younger workers to regard it as a less stable career path and explore opportunities elsewhere.
