The federal government may lose 100,000 jobs next year if Congress does not reverse the automatic spending cuts known as the sequester, according to an analysis from the Goldman Sachs investment-banking firm.
Federal employment including Postal Service workers dropped by 71,000 jobs over the past year, according to the latest numbers from the Bureau of Labor Statistics. The question is whether the sequester contributed to that dip, since no agencies this year planned to lay off employees because of the cuts.
Some of the decline is due to the Postal Service offering retirement incentives for its employees. The agency lost 25,000 workers to early retirement in 2012 and another 34,000 this year.
The report noted that agencies have taken temporary steps to adjust for the budget cuts, placing workers on unpaid leave, deferring investments and postponing training. But it said they may not be able to rely on such solutions in the future.
“If sequestration continues, more permanent adjustments will become necessary and agencies may be more willing to undertake them if Congress declines once again to reverse the cuts,” the report said.
The analysis also found that employment has grown slightly more slowly in states with a higher degree of dependence on federal spending compared to states with less reliance, although it said “the relationship is weak and implies that federal spending restraint has had only a modest indirect effect on employment so far.”
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