‘Willingly Forgoing Paychecks’: Federal
Workers Support Shutdown Fight
By Jenny Brown
Federal workers marched May 1 in New York City against drastic cuts to their agencies. Over 200,000 federal workers are now gone. Photo: Jenny Brown
A coalition of unions in the federal sector signed on to an extraordinary Federal Unionists Network letter September 29 urging the Democrats to fight Trump administration cuts, even at the price of a government shutdown. It was titled “No Bad Budget in Our Name,” and signers represent tens of thousands of federal workers.
Now that the shutdown has started, FUN is organizing a response among federal unionists, stating: “This is much more than a fight between branches of government or political parties. This government shutdown is a showdown between the public and the billionaires.”
“[They’re] using a shutdown as a threat to pressure Congress to pass a budget that impacts our most vulnerable, including seniors, rural communities, hungry children and cuts out access to healthcare for millions of Americans,” said FUN Co-Executive Director Alyssa Tafti in a statement. “Federal workers took an oath to serve the American people, and our veterans, our seniors, and our families deserve better than to have these important services and protections taken away from them,” she said.
Health care workers agreed. “It is completely reckless and morally bankrupt for Trump and Republican leaders to use a government shutdown as leverage to enact massive Medicaid cuts that will harm millions of Americans,” said Yvonne Armstrong, president of 1199 SEIU United Healthcare Workers East, which represents 450,000 public and private health care workers from Massachusetts to Florida.
SAVE OUR SERVICES
“A government shutdown is never Plan A. Federal workers and the communities we serve will face severe hardship,” the FUN letter to Democratic leaders said. “But federal workers will willingly forego paychecks in the hopes of preserving the programs we have devoted our lives to administering.
“In order to save our services today, we need to send a message to this Administration that enough is enough,” the letter concluded.
Democrats are demanding that Congress extend Affordable Care Act subsidies, which Republicans are allowing to expire. Health care costs for 22 million people will rise by an average of 75 percent. Millions would pay thousands more per year, and many will be priced out of health insurance.
Democrats are also trying to stop Trump from unilaterally canceling federal funding, and to restore cuts to Medicaid that are projected to immediately close 300 rural hospitals. But Republicans have refused. By law, Congress controls funding, but the law is not being enforced.
The Republicans passed Trump’s “One Big Beautiful Bill” in July to give the rich more tax breaks. It cut $1 trillion from Medicaid, which many hospitals depend on.
“Trump’s and the Republicans’ track record show they have zero interest in maintaining a government to serve its people,” wrote National Nurses United. “The [Democrats’ proposed bill] would not only restart the government, but also save lives by restoring health care funding and assistance, while ending the Trump administration’s unprecedented power over government spending.” NNU has 225,000 members across the country.
During past government shutdowns, non-essential workers have been furloughed, while essential workers were expected to show up without pay. They eventually received back-pay. This time, however, Trump’s budget director, Russell Vought, has threatened to lay off workers permanently instead. Unions have filed suit in California, charging that he does not have that authority.
HORROR SHOW
Federal workers have been put in this paradoxical position because Trump administration actions since February have already shut down vital government services and safeguards, with no end in sight.
Government workers have experienced eight months of horror, with mass layoffs of probationary employees, data theft by DOGE, and orders that have prevented them from doing their jobs.
At Housing and Urban Development, fair housing lawyers were prohibited from contacting their clients. At the National Institute for Occupational Safety and Health, 90 percent of staff were laid off. At NASA, perfectly good weather satellites were ordered abandoned because they record carbon in the atmosphere. EPA workers charge that administrators are “directly contradicting EPA’s own scientific assessments on human health risks, most notably regarding asbestos, mercury, and greenhouse gases.”
Over 200,000 federal workers have been axed and by December, 300,000 federal workers (one in eight) are expected to be gone.
“Congress must draw the line,” said James Kirwan, a FUN organizer. “Public service and public programs are not bargaining chips in a billionaire power grab.”
BENT ON DESTRUCTION
New Trump-appointed administrators seem bent on the destruction of their agencies. Trump even fired a FEMA head after he told Congress he wasn’t in favor of eliminating the agency entirely.
In the worst union-busting in memory, the administration has claimed that union contracts for most federal workers are void and stopped agencies from collecting union dues. Administrators in many agencies are ignoring contracts and acting like their unions don’t exist.
Lawsuits by the American Federation of Government Employees and the National Treasury Employees Union have had mixed results, but the courts have mostly declined to stop the administration’s actions.
Public protest and the unworkability of the cuts have meant that at a few agencies, notably Veterans Affairs, the IRS, and the General Services Administration, managers have backed off from the more extreme projected reductions in force.
At many agencies, including the VA, FEMA, EPA, and NASA, workers have signed public declarations sounding the alarm that their work was being undermined. Congress, which is controlled by Republicans, has taken no action, however.
“The Continuing Resolution we are currently operating under has given President Trump extraordinary powers over government spending, which he has used to slash public services,” FUN wrote. “As a result, the American people are already experiencing unprecedented harms.”
Addressing the Democrats, FUN wrote: “We ask that you refuse to support any budget that does not rightfully return the power of the purse to Congress and ensure any and all appropriated funds are spent on our critical public services.”
The Federal Unionists Network is holding a call on October 2 called “Federal Worker Showdown: Now is the Time to Fight.” You can sign up at the link.
Jenny Brown is an assistant editor at Labor Notes.
Thoughts From the Shutdown
As we go through Trump Shutdown IV, I had a few thoughts to share.
Montana Senator Steve Daines – Truth Telling Republican
At a time when Vice President Vance is running around saying that the shutdown is because Democrats want to give free health care to “illegals” and Trump is saying that the Democrats want “trans for everyone” (whatever the hell that is supposed to mean), it is refreshing to see a Republican Senator being honest about the key issue.
Senator Daines said that the Democrats want to keep the expanded Obamacare subsidies in place, keeping premiums from soaring for 15 million people, and he is opposed to continuing these subsidies. While I completely disagree with his position, at least Senator Daines was honest about what is at issue. There is no way forward unless we can talk seriously about the issues separating the parties. Unfortunately, Trump, Vance, and Speaker Johnson are instead determined to spew lies and nonsense.
Trump’s New MAGA Slogan is “America Fourth”
Trump’s ambassador to Israel, Mike Huckabee, recently explained that if he seemed to be working as much for Israel as for the United States, it’s because the two countries are like husband and wife. That makes America second.
But then we got pushed back to third when Treasury Secretary Scott Bessent decided to lend Argentina $20 billion to help get Argentina’s president and Trump friend Javier Milei get through elections this month. The loan is especially embarrassing from the “America First” perspective since Argentina has largely replaced US farmers as a source of soybean exports to China.
But America didn’t last long in third place in the Trump administration. Trump signed an executive order committing the United States to defend Qatar after an Israeli strike there last month. The commitment is similar to NATO’s Article 5 provision that an attack on one would be seen as an attack on all.
Those unhappy about seeing the interests of the United States fall to fourth place on the Trump agenda can take solace from the fact that a commitment from Donald Trump is pretty much worthless. Also, does anyone really think that we would go to war with Israel to defend Qatar?
Trump’s Shutdown Threats are Just Stupid
Trump is saying that he is cancelling spending in blue states and firing Democratic workers because of the shutdown. Trump doesn’t have legal authority to do either, even if the SCOTUS may allow it. As Chief Justice Roberts always says, “Ain’t no law with Donald Trump in the White House.”
Anyhow if Trump is allowed to cancel appropriations for states because they vote Democratic and fire government workers for the same reason, we should assume that he would do it anyhow. The shutdown might give him a convenient excuse, but so would the autumn equinox. Trump can always find some excuse to attack the people he perceives as his enemies. The shutdown is irrelevant, as anyone sharper than a political reporter for major media outlets can easily see.
It’s also clear that Trump wanted this shutdown. He prevented all negotiations through the summer and up until the very last day before the end of the fiscal year. That is not the behavior of someone interested in striking a deal.
ADP Jobs Report Was Bad Enough to Get the ADP CEO Fired
With the BLS jobs report for September being delayed by the shutdown, all of us data nerd types are turning to alternatives. The report published by the payroll processing company ADP is the next best available. This doesn’t track the monthly jobs report closely, but taken over a year, the two are generally reasonably close.
The September report showed a pretty bleak picture. The economy lost 32,000 private sector jobs. With the impact of Elon Musk’s deferred firings hitting in September, we likely lost at least 20,000 public sector jobs, for a total job loss of over 50,000. There were also downward revisions to the August data. The report also showed slowing wage growth, as have the recent BLS jobs report.
All in all, the report was bad enough that Donald Trump is probably looking to fire ADP’s CEO, like he did BLS Commissioner Erika McEntarfer after the bad July numbers were released. It looks like jobs are getting harder to find in Donald Trump’s America and the ones people do find are paying less.
There was one other very interesting aspect to the ADP report. The job losses all came from small and mid-size firms. The larger ones were doing fine.
Interestingly, this is the textbook story of what we would expect to see from a high tariff regime. The logic is that the big firms are well-connected. They can go to Mar-a-Lago and give Donald Trump big gold medals and get tariff relief. Small and mid-size firms don’t have the connections and the resources for these sorts of payoffs. For that reason, smaller and more dynamic firms are the ones that would be expected to suffer most in Donald Trump’s economy.
This is just one report, so it would be wrong to make too much of the story here. But it is worth noting. The stock market tells us that the larger firms are doing just fine, at least until the AI bubble collapses, but the story may not be as good lower down the corporate food chain.
This originally appeared on Dean Baker’s Beat the Press blog.
Private Equity and 401(k)s: Plan Administrators Still Not Ready to Dive In
In our August 19 Expose the Heist piece, I raised questions about the willingness of 401(k) plan sponsors to rush into private equity (PE) in the wake of President Trump’s executive order (EO), Democratizing Access to Alternative Assets. New evidence bolsters the argument that the order may not do what it intends to do anytime soon.
Trump’s EO directed the Department of Labor and the Securities and Exchange Commission to open the $9 trillion in workers’ 401(k) accounts to the private equity industry, money that industry believes could bail out struggling private equity funds. Access to workers’ nest eggs has long been the goal of the PE industry, and it has lobbied hard for this change. It is more important now than ever.
Private equity’s performance has been mediocre since the financial crisis and has deteriorated notably since mid-2022. The reason? PE funds failed to mark their portfolio companies to market when the S&P 500 fell 20 percent that year, saddling them with overvalued assets that have proved difficult to sell. At about the same time, the Federal Reserve raised interest rates from near zero to over 5 percent to fight the pandemic-related inflation. High interest rates have made it harder for the unsold portfolio companies to refinance their debts as they mature. The PE industry is looking to Trump’s EO to make workers’ retirement savings available to bail them out. This is a huge pool of capital that PE has had very little access to in the past.
But do the people who manage retirement plans want any part of it? Earlier this month, the Plan Sponsor Council of America (PSCA) put that question to its members, asking them if the president’s executive order had affected their thinking about adding private market investments to their retirement plans. Ninety members responded. The results, published September 19, indicate that the EO will likely disappoint the PE industry. In line with larger surveys, a little over 2 percent of poll respondents reported that they already offer plans that include private market investments. Just an additional 3 percent report they are considering it. Thirteen percent said they are unsure at this time, and 80 percent stated that they haven’t changed their minds and will not be offering private market investments in 401(k) and other employer-sponsored retirement savings plans.
There are plenty of reasons to explain their reticence. Private market investments typically carry high fees, and this could expose employers to being sued by their employees under the Employee Retirement Income Security Act (ERISA) for offering high-fee plans. While it was still below the 2020 peak for such cases, excessive fee cases brought against employers spiked in the second half of 2024.
Indeed, some respondents to the PSCA survey cited employers’ concerns about exposure to liability as fiduciaries if returns on these typically high fee investments fail to produce good returns. Comments included “We are not willing to take the fiduciary risk,” and “Introducing private market investments into our 401(k) plan would significantly increase the complexity of plan administration and potentially expose us to greater fiduciary liability.”
A second theme was the complexity of private market investments and the need for employee education. As one respondent put it, “We have enough offerings that confuse our employees already.”
The Department of Labor and the SEC have until February to respond to the President’s EO and provide reassurance to employers that their employees will not be able to sue them for offering plans that, in addition to their high fees, lack transparency, are illiquid and have limited opportunities for withdrawals, and – in the case of private equity investments – have underperformed the S&P 500 in recent years.
President Trump would like the DOL or SEC to take away workers’ right to sue their employer for investing their retirement savings in expensive and risky assets that do not belong in 401(k)s. In view of the guardrails ERISA provides to protect workers’ retirement savings, this will not be easy.
This first appeared on CEPR.
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