The mass layoffs and agency restructuring announced in 2025 have many Feds asking the same question: Is my job next? For those who’ve seen this playbook before, the signs are familiar. From the 1980s through the 1990s, waves of privatization reshaped the federal workforce, contracting out services, spinning off government functions, and forming public-private partnerships. Today, that model is reemerging under the banner of “efficiency.”
But history tells us privatization is never just about budgets. It’s about people — our people — and the stakes couldn’t be higher
Lessons from Past Privatization Waves
In 1991, Harvard Business Review pointed out that while privatization delivered cost savings, streamlined operations, and sparked innovation in some areas, its success varied widely depending on how it was carried out.
In many instances, the same strategies that improved efficiency also led to reduced public access to services, widespread federal job losses, and weaker accountability when contractors replaced career civil servants.
It’s worth noting that despite these recurring shifts, federal employment has remained remarkably steady — hovering around two million civilian employees since the 1960s. That consistency underscores a truth often overlooked in these debates: America still relies on its federal workforce to function.
What Federal Employees Should Expect Next
As privatization pressures grow, the impact of government outsourcing on employees is becoming more apparent.
Not every role is equally at risk, but certain sectors are more vulnerable. IT services, HR, facilities management, and healthcare administration are already showing signs of pressure. Private contractors are increasingly stepping in in these areas — not just for specialized tasks, but for core functions once handled in-house.
Watch for the warning signs:
- Contractor creep, where the number of contractors steadily grows while the number of federal employees declines
- Reduced internal hiring, with open positions either left vacant or replaced by contract roles
- Outsourcing of previously core functions, including areas like benefits administration or employee onboarding
