When the Trump administration first announced its “workforce optimization initiative” for the federal government in early 2025, Greater Washington’s economy entered into a state of limbo.

For the District of Columbia and its neighboring Maryland and Virginia suburbs—a region colloquially known as the “DMV”—the federal government has long been the lifeblood of the regional economy and labor market, conservatively accounting for 9.7% of its employment base (reflecting only direct federal government civilian jobs, and excluding private sector jobs funded through federal contracting). When the Department of Government Efficiency (DOGE) announced the beginning of its federal workforce purge, the question was not whether the DMV economy would suffer the consequences, but how much it would suffer, and for how long.

While some of the impacts of federal downsizing have been readily apparent in monthly data releases from the Bureau of Labor Statistics (BLS), the design of DOGE’s strategy has previously made the scope of damage on the DMV region’s labor market difficult to quantify. While thousands of federal workers were terminated immediately, more than 150,000 others accepted offers for deferred resignation (also known as the “Fork in the Road”), which kept them on the federal payroll through the end of the fiscal year on September 30, 2025. These workers, while functionally jobless, were thus excluded from official job and unemployment counts in the first three quarters of 2025.

Now, BLS’s new employment data for the last months of 2025 provide the first comprehensive insight into the impacts of federal layoffs on the DMV region’s economy, including through the “fork.” Through our analysis of this data, we find that:

Job totals across the DMV region declined by nearly 1.7% in December 2025 compared to the previous year—a higher drop than any other major metropolitan area in the United States.
While declining job counts were heavily attributable to federal workforce cuts (a 14.3% loss), this trend was worsened by declining private sector employment.
Federal layoffs and private sector stagnation have driven unemployment rates up in every county in the DMV region, particularly for women and workers of color.

This analysis covers calendar year 2025 and focuses on jobs and the labor market. However, readers can find recent data on other topics, such as home sales and tourism, in our interactive dashboard.

Brookings’ DMV Monitor is an interactive dashboard and ongoing project tracking 25 indicators of the Greater Washington region’s economic health. The dashboard provides both short-term trend statistics and current levels for most indicators, along with comparisons to other major metro areas and breakdowns for county and county-equivalent jurisdictions in the DMV region.

The DMV region lost more than 56,000 jobs in 2025

In our inaugural release of the DMV Monitor last September, BLS employment data were available through June 2025—halfway through the calendar year and before the fork benefits expired. In that release, we found that total employment in the DMV region was nearly unchanged from the beginning of the year: a 0.13% gain. While federal job losses were already evident in the data, above-average private sector job growth was offsetting some of these losses, keeping job growth in net positive territory despite showing early signs of stagnation in May and June.

Data from beyond the fork depict a bleaker picture. In the 12 months following the start of the second Trump administration, the DMV region’s federal employment base shrunk by over 14%, driving a 1.7% decline in total nonfarm civilian jobs—the largest drop among all major metro areas in the United States. The bulk of this decline occurred after the fork in October 2025, indicating that the deferred resignation program was the primary pathway to unemployment in the DMV region in 2025.

In total, the DMV region ended 2025 with around 56,000 fewer jobs than it had a year prior, with about 54,000 of these jobs (96%) stemming directly from federal layoffs.

Figure 1

These federal workforce declines are grim but unsurprising, as the Office of Management and Budget (OMB) has sporadically released its own estimates of employees that opted for deferred resignation nationwide. Of potentially greater cause for alarm are trends in the region’s private sector employment base. In its original guidance to staff eligible for deferred resignation, the Office of Personnel Management (OPM) encouraged federal employees to switch into “higher productivity” jobs in the private sector as soon as possible, assuming that the DMV region’s economy would be capable of absorbing the impacts of those cuts. Instead, BLS’s December jobs report indicates that private sector employment in the DMV region dropped by 0.28% year-over-year, compared to a 0.3% gain across all major metropolitan areas and a 0.19% gain nationally.

Figure 2

The dramatic decline the DMV region’s private sector jobs emphasizes the strong link between the federal government and the region’s larger economy. While nearly 1 in 10 workers in the DMV region are federally employed, a significantly higher volume of high-skill workers are employed in sectors that are adjacent to the federal government—a critical factor in the region’s success with business attraction and retention. Federal contracting and procurement attract businesses looking to sell goods and services to government agencies, while also supporting small and local businesses in the District and the region’s suburban counties. As federal layoffs ramped up and federal contracting cratered, it is clear that the region’s federal employment base has historically been complementary to growth in its private sector, providing many of the necessary inputs that private businesses and workers have relied on to thrive.

In fact, a closer look at job trends by sector shows that while hospitality, state and local government, education and health services, and construction continued to add jobs in the DMV region in 2025, steep job losses in federal work have been followed by job losses in professional and business services; trade, transportation, and utilities (especially retail); information; and manufacturing sectors. The negative trend in the information sector corresponds with a notable year-over-year decline in venture capital flow to startups in the DMV region—a divergence from positive flows nationwide and the DMV region’s “readiness” as an artificial intelligence “Star Hub.”

Figure 3

Unemployment rates are rising in every county in the DMV region, disproportionately harming women and people of color

Even before President Trump won the presidential election in November 2024, labor market experts were raising the alarm about the potential impact of federal job cuts on the DMV region’s Black middle class. Despite its ongoing struggles with geographic segregation and wage disparities, the region is home to four of the nation’s highest-ranking counties on the Black Progress Index, due in part to the presence of federal jobs offering work with relatively high wages, career stability, and strong pathways for career growth. As of 2023, 19% of the federal workforce self-identified as Black, compared to 13% of all workers in the U.S. labor force, making them uniquely exposed to displacement by federal downsizing.

In late 2025, a previous DMV Monitor update found that Black workers saw lower increases in unemployment than their white peers relative to 2024 levels, based on data collected before the fork. But unemployment data collected after the fork indicate that this was a temporary outcome. As of November 2025, year-over-year increases in unemployment among Black workers were over twice as high as for white workers in the DMV region.

In total, unemployment in the DMV region rose by 1.3 percentage points between November 2024 and November 2025—an increase 3.5 times higher than reported for the nation overall.

Figure 4

Demographic disparities in the impact of federal layoffs extend beyond race. While women account for less than half of the federal workforce, analysis by the National Women’s Law Center in May 2025 found that they accounted for a much higher share of employment at agencies undergoing mass layoffs, including the departments of Veterans Affairs, Education, Health and Human Services, Treasury, and Housing and Urban Development (most of which employed an above-average share of nonwhite workers as well). As a result of these layoffs, unemployment among women in the DMV region increased by 1.5 percentage points between November 2024 and November 2025—three times higher than the national average for women.

While subnational unemployment data are not available by race and gender together, there is strong evidence to suggest that the impacts on Black workers and women in the DMV region’s federal workforce are intersectional rather than independent trends. New reporting from the Institute for Women’s Policy Research found that Black women accounted for more than half of all job losses among women nationwide in 2025, despite making up less than 15% of the female workforce. In the federal workforce specifically, Black women experienced a drop in employment nearly three times higher than the rate for women overall. It is reasonable to conclude that these outcomes almost certainly apply to rising unemployment in the DMV region as well.

Figure 5

Unemployment increases driven by federal layoffs extend far beyond the District of Columbia. Even though most of the region’s federal jobs are concentrated in the District and a select few outlying suburban counties, workers commute into these counties from all over the region. And unlike job totals, unemployment rates are calculated based on place of residence rather than place of work. While unemployment rates did rise the most in the District, the region’s suburban counties in Maryland have also been hit hard. Unemployment rose in all of the region’s suburban Virginia counties as well, with counties closest to the District with historically higher federal job counts bearing the brunt of the impact.

Figure 6

Through mass layoffs, the federal government is abandoning its capital

In prior releases of the DMV Monitor, we have emphasized the region’s immense economic strengths and potential opportunities for regional collaboration in the wake of federal downsizing. These strengths have not gone away. The DMV region continues to be one of the strongest talent hubs in the United States, just behind Silicon Valley in the share of residents with a bachelor’s degree or higher. Year-over-year crime rates have declined across the region every month since the start of 2024. More people visited the region in 2025 than they did the year prior, and spending by these visitors has continued to rise.

But the data are clear that these regional economic strengths are not enough to fully withstand federal policies designed to diminish them. The federal government is not a passive bystander to the DMV region’s economy—it is an anchor, and the loss of approximately 54,000 federal jobs in the span of 12 months is not an exercise in efficiency, but an industry shock bearing consequences for the entire region. The DMV region is not struggling to navigate this shock as a result of its own existing economic challenges—there is not a city, county, or region in the United States that could withstand a sudden reduction in force of this scale by its largest employer.

Mitigating these consequences and undoing these 12 months of damage will require effort and investment by leaders engaged in all corners of the region, across industry sectors, and at all levels of government. One early example of collaboration is Talent Capital, the region’s new job hub. This type of collaboration is challenging, but demonstrably possible if the right organizations are willing to come to the table and work together. The best time for this collaboration may have been 12 months ago. The second-best time is now.

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