Over 17,000 VA staff depart, US unemployment at 4.2 per cent; is the federal workforce at a tipping point?

As the US labor market shows signs of weakening, with July 2025 marking the slowest job growth in over two years, a quiet but historic exodus is underway inside the federal government. The Department of Veterans Affairs, one of the nation’s largest employers, is losing over 10,000 staff through a controversial “deferred resignation” offer, even as the broader economy cools and unemployment ticks up to 4.2 percent.

What started in January as a cryptic “Fork in the Road” email from the Office of Personnel Management has now led to sweeping staffing reductions across multiple agencies.

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At the VA, doctors, nurses, and front-line support workers are walking out, raising new fears about essential services and job security, at a time when hiring in sectors like retail and tech is slowing and layoffs are rising.

What is DRP?

The Deferred Resignation Program (DRP) refers to a voluntary separation offer made to federal employees under the Trump administration in early 2025. It originated from a now-infamous email sent by the Office of Personnel Management (OPM) in January, titled “A Fork in the Road.”

What the DRP allowed?

Eligible federal workers were given a choice:

If they replied “resign,” they would keep receiving full pay and benefits through September 30, 2025, even though they would no longer report to work.

If they chose to stay, they faced uncertainty, including potential layoffs or workforce cuts.

Although the VA initially claimed that “mission-critical” staff such as doctors and nurses would be protected, data obtained through Freedom of Information Act (FOIA) requests by The War Horse show that hundreds of clinical roles have still been approved for resignation. This includes 214 nurses, 35 doctors, and 24 VA police officers.

These resignations come on top of broader attrition. Since last September, the VA has lost 2,000 registered nurses and 750 doctors, reversing hiring trends from previous years.

Support staff are also leaving in droves

The largest categories of staff leaving include 1,355 human resources workers, 1,010 program analysts, and 928 IT employees.

Critics argue that losing these employees will strain the system. Even if doctors and nurses stay, they will face more administrative burden as support staff vanish.

As of July, VA had reduced staff by about 17,000 through attrition, early retirements, and resignations. Another 12,000 are expected to leave by September.

VA Secretary Doug Collins has defended the strategy. He told War Horse that the focus should shift from headcount to outcomes, how many veterans are helped rather than how many staff are hired.

US job market shows signs of weakness

The problems at VA mirror broader concerns about the US labor market. According to the July 2025 jobs report, the US added just 73,000 jobs, the lowest in over two years. The unemployment rate ticked up to 4.2 per cent, marking a second straight month of decline in job growth.

This slowdown is striking. Monthly job gains averaged over 240,000 in 2024. Now, the economy is showing clear signs of cooling, especially in sectors like retail and tech, where layoffs and hiring freezes are becoming more common.

To make matters worse, earlier reports for May and June were revised downward, suggesting that job growth had been overstated.

The Federal Reserve is closely watching the labor data. Inflation remains high between 2.6 per cent and 2.8 per cent making interest rate cuts unlikely in the short term. But a weakening job market complicates things.