The plan also is expected to include major changes to the way the government provides benefits for low-income Americans, an area that conservatives have long targeted as excessive, by consolidating safety-net programs that are administered through multiple agencies.
The reorganization plan also is likely to revamp the Office of Personnel Management (OPM) to shrink its role as the department responsible for employee background checks, retirement claims, benefits and federal workforce policy, two sources with knowledge of the proposal said.
The plan to consolidate the Labor and Education departments, which first surfaced in Education Week and was later confirmed by other news outlets, would allow the Trump administration to focus its efforts to train students in vocational skills in one place.
Republicans have long expressed an interest in eliminating the Education Department since it was created by President Jimmy Carter in 1980. Trump and Education Secretary Betsy DeVos have shown similar leanings.
In 1995, the House introduced legislation to merge the agencies to put K-12 schools and job training together, but the measure failed.
The Education Department is the smallest Cabinet agency in number of employees, with just under 4,000, and a $68 billion budget. It oversees federal student loans, distributes K-12 education funding, and enforces federal civil rights laws at public schools and colleges.
The Labor Department, with about 15,000 employees and a $13 billion budget, has a broad portfolio that includes programs to train workers, enforcement of minimum-wage laws, the Bureau of Labor Statistics — which produces economic data — and the Occupational Safety and Health Administration. Under Republican presidents, the department has tended to have a lower profile than under Democratic administrations.
Other presidents have tried to remake the government with varying degrees of success, failing to enact large changes because they proved too cumbersome, or resistance from Congress and federal employee unions was too strong.
President Barack Obama pledged at a State of the Union address early in his tenure to consolidate multiple trade agencies, but he was unsuccessful.
Many changes the Trump White House will propose Thursday — the Labor and Education merger and other plans to consolidate offices with similar missions, for example — would need to be approved by Congress, making their success a long shot in a politically divided period leading up to the midterm elections.
But the strategies could serve to better frame Trump’s vision of government amid complaints from conservatives about the growing budget deficit. The president has not advocated for specific changes to agencies’ structures, although his supporters often gripe about what they believe is a “deep state” of entrenched federal workers that they want removed.
The government structure has remained largely intact under both Democrats and Republicans, and Trump has even proposed expanding it somewhat by creating a new “Space Force” in the military.
Federal agencies and the OMB, which is leading the reorganization effort, have kept details of their planning secret. Federal employee unions and oversight committees in Congress have voiced concern that the Trump administration did not consult them.
The OPM has long struggled to handle hundreds of thousands of costly background checks each year. It was the target four years ago of a massive theft by the Chinese government of personal information from 22 million current and former federal employees and contractors.
Under the White House proposal for OPM reorganization, details of which were first reported by Federal News Radio, the background investigation system is likely to be transferred to the Defense Department. Other agency functions, including the processing of employee retirement claims and benefits, could be moved to the General Services Administration. Its personnel-policy role could be moved under the OMB.
Some proposals are likely to meet stiff resistance from federal employee unions, which are at odds with the administration over executive orders the White House issued in May to limit their power.
Consolidating programs and offices could lead to a smaller workforce. Mulvaney has also told agencies that they must come up with a long-term blueprint to cut the number of federal workers starting in October.
Josh Dawsey and Valerie Strauss contributed to this report.