Federal Reserve plans to cut workforce by 10% as pressure mounts

The Federal Reserve, an essential component of the U.S. economic system, announced plans to reduce its workforce by 10% in a memo released by Chair Jerome Powell. This initiative comes amid pressures on the central bank to streamline its operations and manage public funds effectively. The action was spurred by ongoing assessments of staffing and resources, highlighting the importance of reevaluating organizational efficiency from time to time. To facilitate this reduction, the Fed will implement a voluntary deferred resignation program aimed at employees who are eligible for full retirement by December 31, 2027. This approach mirrors similar workforce reduction strategies the organization employed in the past, such as during its 1997 efficiency push. Powell emphasized the significance of maintaining a well-prepared staff to fulfill the Fed's statutory responsibilities. In addition to the voluntary program, attrition will also play a role in achieving the target reduction. The Federal Reserve is currently under a hiring freeze, signaling a cautious approach towards managing its workforce. With approximately 24,000 employees recorded in its 2023 annual report, the anticipated cuts are estimated to result in around 2,000 job losses, potentially bringing the total headcount below 22,000. The announcement reflects an ongoing dialogue about government efficiency and spending, particularly highlighted by figures like Elon Musk, who has voiced concerns about the size and expenses of the Federal Reserve's workforce. Despite outside assertions of overstaffing, Powell has defended the current structure, stressing the dedication of employees who work diligently within the resource parameters set by the bank.