‘Everybody is going to be impacted’ by federal layoffs, cuts
Southwestern Pennsylvania does not come close to rivaling regions like northern Virginia or the corridor between Baltimore and Washington, D.C., for its number of federal employees, but the large-scale layoffs of the federal workforce that have been initiated by the White House and the potential cuts to programs like Medicaid will have an impact in the region.
“Everybody is going to be impacted by this, not just federal workers,” said Risa Kumazawa, an associate professor of economics at Duquesne University and president of the Economic Club of Pittsburgh.
The number of federal employees working in Washington, Greene and Fayette counties is relatively small. According to 2023 data from the American Community Survey, the combined number of federal employees in the three counties came to a little less than 2,000, and was less than 1% of the workforce in each of the three counties. Mine safety and parks personnel and postal workers are among their ranks.
The American Community Survey also found there were almost 17,000 federal employees in the Pittsburgh metro region, second only to Philadelphia in the commonwealth. The federal government is the third-largest employer in Allegheny County, but 19th in Washington County, well below UPMC Washington Hospital, Walmart, and Giant Eagle.
“The direct impact is not likely that large,” said Robert Dunn, a professor of economics at Washington & Jefferson College, but he explained that the effects of the layoffs would “ripple out” and make a difference for people who rely on federal services.
Federal contracts in the region could also be affected, with federal money that has flowed to private businesses and universities potentially being halted. Also, the University of Pittsburgh and Carnegie Mellon University, to cite two examples, would stand to lose millions of dollars every year if funding for the National Institutes of Health is significantly pared.
Kumazawa doesn’t believe private sector firms will follow in the federal government’s footsteps and start laying off employees in large numbers. However, Dunn pointed out that hearing the drumbeat of news day after day about layoffs, plus the possibility that tariffs will be put in place against Canada, Mexico and the European Union, has created uncertainty within the larger economy.
“There’s uncertainty about what cuts will go through and their magnitude,” Dunn said. That could lead consumers to hold off on making large purchases.
One problem for federal workers who lose their job, no matter where they live, is finding comparable employment in the private sector, Kumazawa noted.
“Where do they go?” Kumazawa said.
Another potential area where federal budget cuts could have an impact on the region is through health care. The budget resolution narrowly approved by the U.S. House of Representatives Tuesday calls for a $2 trillion reduction in federal spending over the next decade, and most experts say achieving that level of savings would be impossible without cutting Medicaid, which provides health coverage for low-income families and individuals. About 83 million Americans are enrolled and a little more than 3 million of those are in Pennsylvania.
Medicaid programs are jointly administered by states and the federal government, with the federal government picking up about two-thirds of the cost. According to data from Georgetown University’s McCourt School of Public Policy, Fayette County had the second-highest rate of Medicaid enrollment in Pennsylvania in 2023, at 25.5%. Philadelphia County had the highest rate at 31.3%.
In Greene County, 23.4% of residents were covered by Medicaid, according to the 2023 figures, and 20.3% in Washington County. The statewide rate of Medicaid coverage is 21.7%. Medicaid cuts would not only affect the health care of people who are enrolled, but also hospitals and nursing homes in rural communities.
“It would have a negative impact on many people,” Dunn said.
Even if cutting the federal workforce and some programs yields cost savings, according to Sandra Trejos, a professor of economics on the Clarion campus of PennWest University, the White House and members of Congress could be “underestimating the true cost and overestimating the true savings.
“Efficiency for the sake of efficiency can backfire for the whole economy,” she said.
.