What 2025 Federal Reforms Did to Worker Engagement

Major federal workforce reforms enacted in 2025 coincided with measurable changes in how federal employees feel about their work.

New analysis of Bureau of Labor Statistics data and Gallup Panel workforce studies shows that after the reforms took effect, federal workers experienced declines in employee engagement and job satisfaction, alongside increases in burnout and job-search activity. These shifts were larger than those observed among comparable state and local government workers — and private sector counterparts — during the same period. 

While the reforms reduced the size of the federal workforce, they also brought short-term challenges to workplace engagement and other elements of the employee experience. However, employee experiences largely rebounded by Q4 2025 and continued through Q1 2026, suggesting the federal workforce has adapted to the changes.

Federal Employment Declines Relative to State and Local Governments

Federal employment remained relatively stable alongside state and local employment through 2024. Beginning in late spring 2025, federal employment began to decline relative to state and local government employment.

Administrative data from the Office of Personnel Management show that this decline reflected both fewer new hires and an increase in separations, particularly voluntary quits and retirements. In short, the reforms achieved one of their stated goals: reducing the size of the federal workforce.

Recent Declines in Employee Experience Measures

Engagement among federal workers declined relative to state and local counterparts through mid-2025. The gap was largest in Q2 2025, when the share of engaged federal workers fell six percentage points more than it did among state and local peers. By Q1 2026, federal workers' engagement remained four points below that of state and local workers, though the gap had narrowed considerably, and we cannot reject the null that federal workers are no different than state and local workers as of late.

Declines in job satisfaction emerged in Q1 2025 and deepened through Q2. At the low point in Q2, federal workers were about 15 points less likely than state and local peers to report high job satisfaction. The gap narrowed through the rest of 2025 but remained in the range of 10 to 15 points, statistically significant throughout.

Before the reforms, employee burnout levels among federal workers closely tracked with those of state and local peers. That pre-2025 pattern serves as the baseline for estimating how much federal workers' experiences diverged after reforms took effect. In Q2 2025, federal employees were about eight to nine points more likely than their state and local counterparts to report high burnout. That gap narrowed to roughly four to six points by Q4 2025.

The number of federal workers actively searching for a new job rose sharply in early 2025. In Q1, federal employees were about eight points more likely than comparable state and local workers to report looking for another job. The gap shrank steadily over the following quarters and was no longer statistically significant by Q3. By Q4 2025, federal job-search behavior was essentially indistinguishable from state and local peers and remained so in Q1 2026.

These results hold when comparing federal workers to similar private sector workers, accounting for differences in age and education. The results also hold when comparing the same individual over time, which is vital to ensuring that comparisons are not affected by confounding factors across workers.

Prior engagement trends between federal and state and local workers showed no meaningful differences from 2022 through 2024, strengthening confidence that the 2025 divergence was not part of a longer-running trend.

The Moderating Role of Federal Workforce Perceptions

Declines in engagement and satisfaction among federal employees, along with a higher rate of burnout, coincided with worsening perceptions of the workplace. In 2025, federal workers were less likely than in previous years to agree that:

• they trust leadership
• their organization cares about their wellbeing
• they feel connected to their organization’s culture
• their workplace treats people with respect

Once these perceptions are accounted for, the relationship between employee outcomes and federal status shrinks considerably, suggesting that perceptions are an important pathway through which the personnel changes played out. Employees who felt more connected and supported were less likely to experience sharp drops in engagement, pointing to the central role managers and leaders play in moderating the effects of organizational change.

Bottom Line

The 2025 federal workforce reforms coincided with a smaller federal workforce and measurable declines in engagement and job satisfaction, along with higher burnout. While it is too early to determine the long-term effects, the data suggest a rebound by Q4 2025. These findings point to the importance of leadership, workplace culture and employee experience during periods of significant organizational transformation.

Periods of reform or restructuring are not just operational events — they are human events. Federal agencies navigating continued modernization efforts may benefit from:

• clear, consistent communication about expectations and goals
• manager training focused on supporting teams through uncertainty
• reinforcing mission and purpose during periods of disruption
• monitoring employee engagement and wellbeing data in real time

Workplace practices related to trust, wellbeing and connectedness appear to shape how employees respond to change. Even when circumstances are largely outside of a leader’s control, focusing on what is within their control makes a difference.