Maryland and the greater Washington, D.C. region are feeling the brunt of sweeping changes in federal employment policy, as recent layoffs and declining tourism send ripples through local economies. The numbers are stark: according to the Bureau of Labor Statistics, Washington, D.C. posted the nation’s highest seasonally adjusted unemployment rate for the third consecutive month, reaching 6% in July 2025. Neighboring Maryland and Virginia have seen their jobless rates inch up as well, to 3.4% and 3.6% respectively, reflecting broader regional unease.
At the heart of these trends is the federal government’s deep influence on the region’s economic health. Maryland Comptroller Brooke Lierman, speaking on August 21, 2025, underscored just how crucial federal dollars are to her state. "The federal government contributes about $150 billion annually to Maryland's economy, representing 10% of all wages in the state," Lierman explained, as reported by WNST. "They helped create the middle class in Maryland and across the country. They’re the big kahuna in Maryland employers."
But that partnership is under strain. Since the beginning of President Donald Trump’s second term, federal agencies have undergone major staff reductions, either through layoffs or voluntary resignations. The Department of Government Efficiency, a hallmark of Trump’s administration, has been at the forefront of these efforts. Earlier this summer, June 2025 saw the largest single federal layoff in decades, a move that Lierman called "concerning for Maryland’s economy." She described the impact as personal, noting, "These are our neighbors and our friends... my sister-in-law worked for a great refugee advocacy company and her agency, and it’s really sad to watch."
The Supreme Court’s July decision to green-light further downsizing of the federal workforce, despite labor union protests and warnings about the loss of critical government services, has only heightened anxiety. Payments to unemployed federal workers in D.C. climbed from $2.01 million in April to $2.57 million in June, according to the D.C. Office of Revenue Analysis. The DC Fiscal Policy Institute warned that these layoffs could worsen D.C.’s already stark Black-white unemployment gap.
Lierman’s office is keeping a close eye on the numbers. "We’re following our sales taxes to see if there’s impact," she said. "We want to provide the single source of truth on the numbers, and what that means for our state and our communities." The next public update on Maryland’s revenue and economic outlook is set for September 2025, when the Board of Revenue Estimates will convene.
It’s not just federal jobs at stake. Immigrants form a vital part of Maryland’s workforce, making up nearly 17% of the population and 20% of the workforce. The potential loss of 1,800 Haitian workers on the Eastern Shore—who may lose their status as of January 2026—could have a cascading effect. Lierman explained, "Overnight, that’s thousands of spots that these farms would have to fill while we send these Haitian Americans who have been here for decades off. I mean, chicken more expensive. It makes it more expensive for everybody." The loss would not only drive up chicken prices but also shrink the tax base, further straining state revenues.
Maryland’s situation reflects a broader regional challenge. As the federal government retrenches, states like Maryland and Virginia are forced to pivot, seeking to bolster their private sector economies while maintaining essential services. Lierman emphasized, "What I want to do is focus on building a more affordable Maryland, right, a place where folks can buy a house, can send their kids to great public schools, can live here with dignity and safety." But the task is daunting, especially as federal policy decisions reverberate through the housing market, education funding, and local business landscapes.
Meanwhile, the District of Columbia faces a double whammy: federal layoffs and a sharp decline in international tourism. The World Travel & Tourism Council reported that international visitor spending in the U.S. is projected to fall to just under $169 billion in 2025, down from $181 billion in 2024—a 22.5% decline from the previous peak. The causes are manifold: tariffs, harsh rhetoric, and alarming reports of tourists being arrested at the border have deterred many, particularly British, German, and South American travelers. For D.C., where tourism is a major income driver, the loss is keenly felt.
In response to rising unemployment and concerns over crime, Republican leaders have deployed National Guard troops to D.C., aiming to reduce crime and boost immigration enforcement. However, city officials maintain that crime is already falling, suggesting a disconnect between federal and local perspectives on the city’s needs.
For ordinary Marylanders, the uncertainty is palpable. Lierman’s office has prioritized community support programs, such as the earned income tax credit and unclaimed property assistance, to help residents weather the storm. "We’re out and about really trying to be a resource for everyone," she said. The office is also working closely with private partners and community leaders to support both residents and businesses through these economic challenges.
The personal touches in Lierman’s public appearances—her pride in her children’s participation in South Baltimore Little League, her banter about crab cakes—offer a reminder that behind the numbers are real families and communities grappling with change. "That is a really special spot," she said of the Little League, "70 plus years of families playing South Baltimore, Little League."
Looking ahead, much depends on the federal government’s next moves, the resilience of local economies, and the ability of state leaders to adapt. The September meeting of the Board of Revenue Estimates will be closely watched for signs of recovery or further trouble. For now, the region is in a holding pattern, waiting to see whether the storm will pass—or if more turbulence lies ahead.
