President Trump’s federal hiring freeze and decision to fire Bureau of Labor Statistics Commissioner Erika McEntarfer raise questions about the validity of inflation data.
President Trump promised on several occasions to protect Social Security, Medicare, and Medicaid during his campaign last year. He has not overtly broken his promise not to cut Social Security benefits, but his federal hiring freeze and decision to fire Bureau of Labor Statistics Commissioner Dr. Erika McEntarfer could still hurt retirees and other beneficiaries.
Read on to learn more.
Image source: Official White House Photo by Andrea Hanks.
President Trump’s federal hiring freeze threatens the integrity of data needed for Social Security’s 2026 COLA
President Trump instituted a federal hiring freeze after his inauguration on January 20. The freeze has twice been extended and is currently effective until October 15. Importantly, while it does not directly hurt Social Security beneficiaries, it has forced the Bureau of Labor Statistics (BLS) to use a less accurate guesswork to track inflation, according to The Wall Street Journal.
That matters because inflation data gathered between July and September will be used to calculate Social Security’s cost-of-living adjustment (COLA) for 2026. Should that data underestimate true inflation, benefits would lose buying power next year because the COLA would be too small. Of course, it is equally possible the data overestimates inflation, in which case benefits would gain purchasing power because the COLA would be too large.
Nevertheless, questionable inflation data will make the 2026 COLA suspect, and the timing is particularly bad. The Senior Citizens League, a nonprofit advocacy group, estimates 20% of Social Security’s buying power has been stripped by insufficient COLAs since 2010. Additionally, most retired workers think the last two COLAs were too small, according to research from The Motley Fool.
President Trump’s decision to fire the BLS commissioner could further undermine data integrity
President Trump ousted BLS Commissioner Erika McEntarfer on Friday, August 1, when the agency not only published dismal employment numbers for July, but also downwardly revised estimates from May and June. Details are provided below:
- Nonfarm payrolls increased 73,000 in July, well short of the consensus estimate that said employment would increase by 110,000 workers.
- Nonfarm payrolls were originally reported to have increased 147,000 in June, but that figure was revised down to 14,000 workers.
- Nonfarm payrolls were originally reported to have increased 144,000 in May, but that figure was revised down to 19,000 workers.
Importantly, downward revisions to nonfarm payroll numbers are common because the survey results used to tabulate employment continue to roll in for several months after the initial report. But the magnitude of the latest downward revision was the largest since 2020 and second largest since 1980.
Trump, without offering any evidence, insinuated the downward revisions were a politically motivated attack. He promptly told his team to fire Commissioner McEntarfer, much to the dismay of many economists. Her predecessor, Trump-appointee William Beach, called the decision “totally groundless.” He also said it “sets a dangerous precedent and undermines the statistical mission of the Bureau.”
Many economists have echoed that opinion, noting that Trump himself is probably responsible for weak employment numbers because of radical changes in U.S. trade policy. The stop-and-start tariffs imposed throughout the year have created uncertainty across corporate America, and it makes little sense to hire more employees during periods of elevated economic uncertainty.
Regardless, Trump’s decision to fire McEntarfer (seemingly because he did not like the latest employment data) raises a critical question: Will Americans trust nonfarm payrolls data in the future, or will they question its integrity because Trump is attempting to politicize an independent agency?
By extension, that question also applies to the other data for which the BLS is responsible, including inflation data used to calculate Social Security’s COLAs. Put differently, while the firing of McEntarfer will not directly hurt retirees, it could further undermine confidence in inflation data published by the BLS. That is bad news for Social Security beneficiaries.
