Earlier this month, the US Supreme Court gave the Trump administration the green light to continue with mass layoffs of federal workers. This decision came on the heels of multiple executive actions that have already led to mass firings within many federal government agencies. Additionally, on July 7th, the Trump administration extended the federal “hiring freeze” for an additional six months.
So far, tracking analysis suggests that about 178,000 federal workers have been laid off in 2025 along with plans for 164,000 additional federal workforce reductions. Meanwhile, since the Trump administration began its government downsizing and “reductions in force” (RIF), Reuters estimates that 260,000 civil servants have been fired, resigned, or taken early forced retirement. If 342,000 federal workers ultimately lose their jobs, this means the federal civilian workforce could be reduced by about 14 percent. There has also been about $88 billion in cancelled grants ($44b) and contracts ($44b), according to the Department of Government Efficiency (DOGE). It is important to highlight that these massive grant and contract cuts will likely bring additional job losses at universities, hospitals, schools, non-profits, and other businesses over the coming years.
How Could Federal Cuts Impact the Ohio River Valley?
The most reliable data shows that there were approximately 191,500 federal employees (excluding about 62,000 US Postal Service workers) in the four-state Ohio River Valley region in December 2024. These federal employees make up several percent of each states’ workforce, ranging from 3.3% of total jobs in West Virginia to 1.1% in Ohio. Within each state, some county economies rely heavily on federal employment at military bases, Veterans Affairs (VA) hospitals, and federal prisons. If federal workforce cuts in Ohio River Valley states are proportionate to the 14% reduction nationwide, this would result in the loss of over 27,000 direct federal jobs in the region.
But what about all of the lost grant and contract dollars? According to USASpending.Gov, in FY 2024, about $49.9 billion in federal contracts were performed in the four Ohio River Valley states. This represented about 6.7% of total federal contract disbursements. Using job estimates from Nation Analytics, the four states could have an estimated 200,000 direct jobs funded by federal government contracts, based on a cost-per-year-per-job of about $250,000.* If federal contract spending is reduced by 6% from FY 2024 levels in the Ohio River Valley states, this would reduce contract employment by about 12,000 jobs.
Source: ORVI analysis of US BLS QCEW and Nation Analytics data
It is unknown how many federal grant-funded jobs are in the Ohio River Valley states, since it is nearly impossible to link federal grant dollars to a position within a university, hospital, non-profit or business one-to-one. The four states received $110 billion in federal grants in FY 2023, which was approximately 10% of all federal grants that year. The largest chunk of this funding was for Medicaid and other social assistance programs. Significant reductions in federal Medicaid dollars from the 2025 Budget Reconciliation Bill could bring unpredictable employment and care service reductions to the region’s healthcare sector, which employs 1.9 million or 13.4% workers as of 2024. A good portion of federal grants support non-profit organizations doing community work in the region. According to the Urban Institute, 12,107 non-profits in the four states received $24.7 billion in federal grant funding, many of which provide in-direct federal services. In 2022, nonprofit organizations supported 1.625 million jobs in the region, making up 13.5% of total private sector employment.
There are over 2 million people who are public servants in the federal government and millions more working through federal contracts and grants. The federal government is the nation’s largest employer. The reductions in the federal workforce could have large and negative impacts on state economies directly and indirectly. This is, in part, because federal jobs pay relatively well for those without college degrees while disproportionally employing veterans, disabled people, racial minorities, and others that face discrimination. When these federal incomes are removed from local economies, their spending vanishes as well, creating a domino effect. Less spending in the local economy reduces tax revenues and supports fewer other jobs in the region. The reduction in federal employment could also lead to more privatization and out-sourcing of essential government services that could cost taxpayers billions by creating more so-called “middle men” or creating a profit incentive where none currently exists.It is also important to note that many government employees who are specialized, or workers like doctors and nurses supported in part by programs like Medicaid, will simply move elsewhere if their funding is reduced in rural areas, further shrinking services for people that need them most.
Government is the main tool we as a nation have to collectively address shared problems that cannot or will not be addressed at the individual level or by markets concerned primarily with profits. No individual has an incentive to single-handedly shoulder the cost of police and fire departments to protect our property, or to build roads connecting our homes to our grocery stores and kids’ schools, or to fund the trial-and-error research endeavors needed to create the next breakthrough medical advancement. The government, like any large organization in society (including private corporations), has flaws. But it is controlled by the people, with checks and balances. While additional oversight is needed to hold government accountable to the public, upending the apple cart out of frustration and slashing federal workers, grants, and contracts haphazardly is unlikely to either make government cheaper nor more efficient. Instead, these cuts are likely to create unintended consequences for vital industries like healthcare and education and crunch local economies, whose taxpayers may have to pick up the slack, either out of pocket or eventually with higher local taxes to replace what the federal government once provided.
*According to Nation Analytics, $404.2 billion in federal contract obligations for services in FY 2022 created 2,157,018 direct jobs while $240.5 billion product purchases created 645,87 direct jobs. Altogether, the $$644.7 billion created 2,802,875 direct jobs in contracts for services and for products in FY 2022 for an average cost of $230,015 per-job-per-year. The four states comprised 6.3% of FY22 federal contract obligations or $40.7 billion, which amounts to 177,276 direct jobs, all things being equal. Adjusting the $230,015 for inflation from FY2022 to FY 2024 using the midpoint of each fiscal year (March 2022 to March 2023) is $250,000 rounded up. In FY 2024, the four states comprised $49.9 billion of federal contract obligations and total direct employment of 199,600 based on a cost-per-year-per-job of $250,000.