Federal Cuts Slash California Jobs, but Local Hiring Keeps Economy Steady

California experienced one of its biggest monthly losses of federal jobs in more than a decade, according to a new report by state employment officials.

More than 2,000 federal positions were cut in May, with the U.S. Postal Service, federal prisons and the Departments of Interior, Veterans Affairs and Defense facing the largest reductions. Local government hiring, meanwhile, increased by more than 3,000.

“California’s economy is still strong,” said Ryan Cummings, chief of staff at the Stanford Institute for Economic Policy Research.

Since January, the Trump administration has pursued sweeping cuts to the federal workforce. The Department of Government Efficiency, created by President Donald Trump and previously headed by tech billionaire Elon Musk, was tasked with reducing the federal government’s spending.

Tens of thousands of federal employees have been fired, placed on administration leave or processed into deferred resignation programs since the agency’s creation. A federal judge recently extended a preliminary injunction on further cuts to the workforce.

Fortunately, California’s employment rate sits at a steady 5.3% and hiring has remained relatively stable overall, Cummings said. The state added more than 17,000 jobs last month, with health care and social assistance sectors seeing the greatest growth.

The federal job losses will not significantly affect the state’s economy in the short term, Cummings said.

He added, however, that people will still feel the effects of the cuts on the ground. Federal agencies such as those responsible for air traffic control, national park maintenance and nuclear oversight have been affected by the federal administration’s attempts to downsize.

Veterans who rely on the Department of Veterans Affairs may struggle to access the same level of services because there’s less staff, Cummings said. People living in rural communities who rely on the U.S. Postal Service to receive and send their mail may see certain routes get cut, he added.

“It’s all of these things that can collectively happen over time,” Cummings said. “It then turns into a more chronic condition.”

It’s very rare that economists see such sudden changes to the federal workforce, Cummings continued. While the state saw similar losses in 2010, the changes to federal employment rates were a result of people being temporarily hired for the census.

“What we’re seeing now is very different,” Cummings said. “The people who are losing their jobs aren’t simply completing their time-limited contract. It’s Americans at all stages of their careers who either have been or were expecting to dedicate their lives to public service.”