RIF’s are in the news recently which is Reduction In Force also known as laying off, buying out, or early retiring the federal workforce. The goal of the current administration is to reduce the federal workforce by tens of thousands of workers. When a mass layoff of tens of thousands of employees happens there will be an impact from RIF’s. Will it affect you? 

Let’s just say if the federal government reduces the workforce by 100,000 people across all the agencies. Could this affect the average person? Here are some things to consider. 

Taxes could go up 

If you are laid off from unemployment, you can apply for unemployment benefits. You will receive a stipend to help you get through the time that it takes you to find another job. That benefit is paid by the state. If there was a concentration in a certain city who were let go, let’s say 1,000 people, those 1,000 people could all apply for unemployment benefits. If the state pays for this benefit for these many people, they’ll have to replenish the budget. Where does the state get their money? From taxes. That means that you, if you live in that state, may have to pay higher taxes if they can’t find the money elsewhere. 

Home prices could fall 

Those who are laid off and have a mortgage on their home are probably worried how to pay for it. Banks and financial institutions are not going to be too lenient if you were laid off and can’t pay for the mortgage. They are going to want their money and if you can’t make the payments, they may repossess your home. The alternative is to sell the home. What happens if a lot of homes are listed for sale? More supply means lower price.  

Unemployment rises 

Low unemployment is a strong indicator of a good economy. An increase in the unemployment rate could indicate instability in the economy which could make investors concerned and cause the stock market to go down.  

 
Falling investment accounts 

If the stock market goes down everyone will feel the effects. Your investments will lose value. Your retirement accounts will lose value. You’ll have less money.  

Lower credit scores 

Your credit score may go down. If you’re not able to keep up with your payments and racking up debt, your credit score is going to get affected. Your buying power and borrowing power will go down because of this. It’ll be more difficult to qualify for loans. 

Local economy falls 

If an area is impacted by these RIF’s and finding a job is difficult, those people are going to be more cautious where they spend the money they have left. Spending on essential things is going to be the focus. If you stop going out to eat restaurants will be hurt. If you minimize entertainment, those establishments will be hurt. Your local businesses and economy will feel the impacts. 

Strain on programs 

Federal and state assistance programs will feel a strain. Programs such as Medicaid and/or state programs will be tapped more which could cause an impact on how much it could support and for how long.  

Reduction In Force (RIF) is not pleasant and it will have a trickling effect that you may not realize especially at the scale the current administration is looking to reduce it by. The impact of RIF’s will be seen not just by the people who are RIF’ed but by everyone else around them. It’s important to realize one action could have a major rippling effect. If you are interested in following my journey and their journey, follow them on Instagram and email subscribe to get alerts of latest posts or follow me on Facebook, Instagram, and Pinterest.