Business

These L.A. strippers won a union. But the dance isn’t over

Published

1 year ago

October 5, 2023

These L.A. strippers won a union. But the dance isn’t over

The evening air crackles with an optimistic energy outside Star Garden, a small strip club in North Hollywood.

Dancers outside encourage people to enter the coral pink building and spend their money on a hot August night. Rage Against The Machine’s Tom Morello croons union songs and strums his guitar. Striking actors and writers whoop and cheer as they line up at the door. Passing cars honk in support.

“If you’re prepared to go to the club tonight, please do so,” says a dancer who goes by the stage name Velveeta. She speaks through a megaphone. “Party with us.”

The scene is a notable shift from last year, when dancers were urging customers to boycott the club.

It’s the evening of Star Garden’s reopening, the first time the club’s unionized dancers will grace its stage. It’s a night of celebration and reconciliation that marks the end of a tumultuous 17 months during which club management fired more than a dozen dancers, contested the results of a union election held by its strippers, filed for bankruptcy and shuttered its doors.

The peace turns out to be short-lived. And tensions remain as the group of about a dozen dancers negotiate for better pay and working conditions, backed by the century old Actors’ Equity Assn. — spearheading a push to bring formal job protections to a historically marginalized industry.

With the formal recognition of their union, Star Garden dancers became the first at a U.S. strip club to unionize in more than two decades. But they weren’t the last. In mid-September, 16 dancers at northwest Portland’s Magic Tavern followed their lead, unanimously voting to join Actors’ Equity.

As newly unionized units at Star Garden and Magic Tavern negotiate their first contracts, their gains could set a precedent for dancers at other clubs looking to unionize.

Star Garden dancers cheer each other on as they return to work on the bar’s reopening weekend.

(Jason Armond / Los Angeles Times)

Star Garden dancers attended twice-a-month bargaining sessions with management in July and August to hash out terms of the Aug. 24 reopening. But dancers and management agreed on very little. Few dancers were scheduled to perform and management floated the idea of a cover charge that dancers disagreed with.

“It’s kind of like walking into battle because it doesn’t feel like we are working together yet. But we are still hopeful.”

— Reagan, a Star Garden dancer

Star Garden did agree to renovate the club and addressed many environmental safety hazards dancers raised, reinstalling the pole right side up and steam cleaning carpeted areas, for example. The club also agreed to equip security guards with metal detectors, a safety measure dancers requested.

“It’s kind of like walking into battle because it doesn’t feel like we are working together yet. But we are still hopeful. I’m curious how this is going to play out,” says Reagan, a Star Garden dancer who helped organize protests after she was fired last year. She and other dancers interviewed by The Times spoke on the condition they be identified by only their stage names.

As the hours pass, frustration grows.

The small crowd on the sidewalk outside Star Garden is indignant about a newly instituted $40-a-person cover charge, which is significantly higher than at nearby bars, dancers say. When a man at the front of the line complains about the charge, the owner refuses to let him in.

Customers who make it inside report back. Drink prices have ratcheted up, and it’s a surprise that the bar has gone cashless and removed its ATM. Management is also discouraging customers from tipping with cash, dancers say.

Dancers and their supporters accuse Star Garden management of pricing drinks and cover fees in bad faith in an effort to deter customers, demoralize dancers and weaken resolve in contract negotiations.

Management took some cash payments, but refused to give change, says a dancer who goes by the stage name Charlie.

“That’s not how strip clubs are supposed to work. People came prepared to spend cash, obviously,” Charlie says. “It’s really shocking and hard to hear.”

Lisa Howe arrives at Star Garden to support her daughter, a dancer who goes by the stage name Sinder. Howe, taken aback and upset at the $40 charge, decides against paying it.

Star Garden’s owner “doesn’t care about anyone but himself,” Howe says. “The girls are so strong, they stuck to their guns and they did what they had to do … they’re a real family.”

Union buttons for strippers are on a table.

Star Garden owner Stepan K. Kazaryan periodically comes to the front door to peek at the crowd outside. When a Times reporter approaches the door and asks to speak with Kazaryan or other representatives of Star Garden management, a security guard says the owner will not speak with news media.

Reached by phone, An Ruda, an attorney representing Kazaryan, says changes instituted by ownership such as the $40 cover charge were necessary new revenue streams.

“We are trying to make sure there’s enough revenue to grow and sustain the business,” she says. “The dancers would like to see it lowered but that is really something that is a decision for the business to make, it’s not a term and condition of their employment.”

Ruda also represents management at the Los Angeles Times in union contract negotiations.

“Unionizing any place is difficult. Unionizing a strip club is orders of magnitude more difficult.”

— Frankie Butler, Writers Guild of America member who showed up to support the dancers on opening night.

Some patrons are undeterred by the fee.

“It’s incredible what these dancers have managed to do. Unionizing any place is difficult. Unionizing a strip club is orders of magnitude more difficult,” says Frankie Butler, a member of Writers Guild of America who lined up outside Star Garden on opening night.

Butler and other writers came to show support because strippers did the same for them at their picket line. “They brought such great energy,” Butler says. “The obvious solidarity move is to come here.”

“On the sidewalk out here we create a little bit of the world we would like to one day see, of joy and solidarity, strippers and farm workers and hotel workers and actors all having a ball. Inside it’s an entirely different story,” says Morello, of Rage Against the Machine, who frequently joined dancers picketing last year.

The strip club in North Hollywood was jolted out of obscurity in March of last year when more than a dozen dancers began picketing outside the club. The club fired the group of dancers after they voiced concerns that security guards failed to step in when customers became aggressive or threatening. Dancers began protesting when club management refused to engage and locked them out.

The dancers proceeded to file unfair labor practice claims against the club with the National Labor Relations Board, alleging they were unlawfully fired. They also complained to state regulators about physical and environmental hazards in the workplace, alleging more than 30 violations of health and safety laws.

A woman holds up sign that says "Twerk Union" in front of a strip club.

In August 2022, the group of strippers, in a landmark move, filed a petition for a union election with the NLRB, seeking to join Actors’ Equity Assn., an established union that represents actors and stage managers on Broadway and at venues such as the Hollywood Pantages Theatre.

The club fought against a union election, contending that its business did not fall under the NLRB’s jurisdiction because it did not gross annual revenue of $500,000 or more.

The federal labor board ultimately disagreed with the claim and in October 2022 it ruled that strippers at the North Hollywood bar would be allowed to vote in a mail-in ballot election over whether to unionize.

The labor board tallied results of the election the next month, but couldn’t make a determination in the election because a majority of ballots were challenged by Star Garden, which denied that the dancers were employees of the club.

In early 2023, Star Garden filed for Chapter 11 bankruptcy protection from creditors, petitioning the court to allow the owner to convert the strip club into a pool hall or to close it entirely.

Actors’ Equity accused Star Garden management of making changes without Bankruptcy Court approval, firing remaining dancers, ceasing operations as a strip club and closing most nights. The union filed a labor complaint alleging that letting remaining dancers go violated federal labor law and was intended to quell organizing activity.

About a week before strippers and the club were scheduled to testify at an NLRB hearing in late May, Star Garden abruptly changed course and asked to settle the dispute.

Attorneys representing the club in May withdrew challenges to the election and agreed to recognize the union, dissolve the bankruptcy claim and reinstate fired strippers.

From the ownership’s perspective the reopening was a success, says Ruda, Star Garden’s attorney. Customers returned and there weren’t any security concerns, she says.

“I think the general consensus was the reopening was a positive experience for everybody,” Ruda says.

Dancers and Actors’ Equity officials say that although getting the club to reopen was a win, management’s attitude and the way it has chosen to operate the club is concerning.

“Some of the actions taken by the club’s owners have not been in the spirit of the agreement reached last May, such as excessively high cover charges that only serves to chase away patrons,” says Andrea Hoeschen, general counsel for Actor’s Equity. “We’re hashing out items at the bargaining table, and we have no plans to go away.”

Going into reopening night, dancers say they hoped the energy and patronage of union supporters as Star Garden gets up and running again would show management it should work more closely with dancers to build up business, retain customers and improve workplace conditions.

But a month into Star Garden’s new chapter, the environment inside is bleak at times, dancers say. Management turns away customers at the door at random, prohibits phone use inside and tells dancers they must stay within lines drawn around the pole — a space too small and restrictive for them to actually dance, they say.

Dancers are paid minimum wage, plus tips they earn from performing on stage; they are no longer paid for performing lap dances. (Previously, dancers would take home up to 50% of fees from dances they sold, including lap dances priced at $30 and $100 15-minute “VIP” dances in a semi-secluded booth, according to testimony that dancers submitted to the federal labor board.)

Rules management has instituted are unreasonable and do not have a clear purpose other than to make “absolutely trash fire conditions,” Charlie says. Dancers, she says, don’t feel comfortable performing lap dances until they get a fair cut, and drink prices remain “ridiculously inflated” with water about $15 and a shot costing upward of $20.

Charlie estimates the club on average brings in five to 10 customers each night. She says she repeatedly finds herself placating customers who are upset at the high prices.

“People are like, this sucks, why are we here? Not only are they confused and disappointed, but they are angry, and we’re the ones who have to deal with it,” she says. “It’s challenging to have that conversation over and over.”

A dancer who goes by the stage name Lillith says the club’s security practices have improved and she feels safer and more protected. Some dancers have adapted and experimented with “quirky performance art” in response to the restrictive stage space.

Last week, the club agreed to reduce the cover charge to $25 from $40; it continues to enforce a one-drink-minimum policy.

Seeing the cover charge reduced “showed that we do have a say in how this club operates, and we’re hoping to see a lot more steps in a better direction,” Lillith says.

Overall, strippers’ concerns at the bargaining table are similar to other units Actors’ Equity represents, Hoeschen says. “They perform on stage in front of people, they have security concerns, safety concerns, their dressing rooms need to be kept clean, so there’s a lot of overlap,” she says.

Compensation is the issue that management and dancers are furthest apart on — as is typical of most labor negotiations, Hoeschen says. “That’s the big one,” she says.

Hoeschen declined to provide specifics on wage proposals.

As management and the unionized dancers hash out their first contract, Ruda says she has asked both sides to “give each other compassion and grace.”

“On the management side they’re learning to engage positively with the union, everyone has a learning curve right now.”

A dancer who goes by the stage name Wicked says she reminds herself that negotiations are in progress and each small win matters.

“They are exerting control over whatever they can … and they are seeing that it isn’t working so well,” she says. “This is not done. Nothing is set until we have that first contract.”

Business

How Poshmark Is Trying to Make Resale Work Again

Published

3 hours ago

January 12, 2025

Press Room

How Poshmark Is Trying to Make Resale Work Again

Lauren Eager got into thrifting in high school. It was a way to find cheap, interesting clothes while not contributing to the wastefulness of fast fashion.

In 2015, in her first year of college, she downloaded the app for Poshmark, a kind of Instagram-meets-eBay resale platform. Soon, she was selling as well as buying clothes.

This was the golden age of online reselling. In addition to Poshmark, companies like ThredUp and Depop had sprung up, giving a second life to old clothes. In 2016, Facebook debuted Marketplace. Even Goodwill got into the action, starting a snazzy website.

The platforms tapped into two consumer trends: buying stuff online and the never-gets-old delight of snagging a gently used item for a fraction of the original cost. During the Covid-19 pandemic, as people cleaned out their closets, enthusiasm for reselling intensified. It was so strong that Poshmark decided to go public. On the day of its initial public offering in January 2021, the company’s market value peaked at $7.4 billion, roughly the same as PVH’s, the company that owns Calvin Klein and Tommy Hilfiger, at the time.

Then, the business of old clothes started to fray.

Using the Poshmark app, Ms. Eager and others said, started to feel like trying to find something in a messy closet. The app was cluttered with features that did not work or that she did not use, and it felt “spammy,” she said, sending too many push notifications.

Many platforms found selling used items hard to scale. Now, online resellers are trying to recalibrate. Last year, ThredUp decided to exit Europe and focus on selling in the United States. Trove, a company that helps brands like Canada Goose and Steve Madden resell their goods, purchased a competitor, Recurate. The RealReal, a luxury consignor, appointed a new chief executive as the company tried to improve profitability.

Poshmark is undergoing perhaps the biggest reinvention. In 2023, Naver, South Korea’s biggest search engine as well as an online marketplace, bought the company in a deal valued at $1.6 billion, less than half its IPO price.

Something of a mash-up of Google and Amazon, Naver is betting it can rebuild Poshmark, which has 130 million active users, with the same technology that made Naver dominant in its own country.

It may also help breathe new life into the resale market. Analysts think the resale fashion market still has room to grow in the United States, with revenue expected to increase 26 percent to $36.3 billion by 2028, according to the retail consultancy firm Coresight Research.

New legislation in California could help. The law, passed last year, requires brands and retailers that operate in the state and generate at least $1 million to set up a “producer responsibility organization” to collect and then reuse, repair or recycle its products. Resale platforms like ThredUp and Poshmark could be in a position to help brands carry out that mandate.

At the moment, though, Naver’s focus for Poshmark is more basic: Make it a better place to sell and shop. The company has the “operating know-how” to do that, said Philip Lee, a founder of the media outlet The Pickool, which covers both South Korean and U.S. tech companies.

“They’re trying to renovate Poshmark and then expand the market share,” he said.

A Marriage of Search and Commerce

Poshmark, which is based in Redwood City, Calif., was founded in 2011 by Manish Chandra, an entrepreneur and former tech executive, and three others. In trying to expand, Poshmark faced a problem common to resellers: Capturing the excitement of the secondhand-shopping treasure hunt while not frustrating buyers with an endless scroll. The company knew it needed better search, as well as interactive elements that gave people more reasons to come beyond paying $19 for a J. Crew sweater.

For its part, Naver was looking for ways to push beyond South Korea, where its commerce and search businesses were already mature. The growing online resale market in the United States presented an opportunity, and also gave the company access to the largest consumer market in the world.

“Commerce is a big growth engine for us,” Namsun Kim, Naver’s chief financial officer, said. And the peer-to-peer sector, where users sell to one another, was still in its infancy, with room to expand. But, Mr. Kim added, “it’s a more challenging segment, and that’s why it’s harder for a lot of the larger players to enter.”

There are two common business models for resale: peer-to-peer and consignment. With consignment, a platform collects and redistributes physical goods. Poshmark uses the peer-to-peer model, which relies on scores of people — many of them novices — haggling over prices and then mailing items to one another. This decentralization can be a headache for brands, which like to maintain a certain level of control of their products. And platforms like Poshmark must make buyers comfortable with trusting the sellers on their site.

Before the Naver purchase, it was difficult to push through needed technological changes, said Vanessa Wong, the vice president of product at Poshmark.

“I would always talk to my engineers and ask, ‘What if we do this or do that?’ They’re like, ‘That’s hard. The effort’s really high,’” Ms. Wong said.

Naver’s purchase offered both the investment and the expertise to pull off the changes. Founded in 1999, the company is everywhere in South Korea.

“We are not just a simple search technology or A.I. service,” said Soo-yeon Choi, the chief executive of Naver, whose headquarters are near Seoul. The company, she said, “alleviates the frustrations of people, which is what is needed to help growth.”

Search built Naver “into the massive power that they are in Korea,” said Mr. Chandra, who stayed on as chief executive after Naver’s purchase. It was the top priority when the company bought Poshmark.

Several new elements for users and sellers have been introduced. With a tool called Posh Lens, users can take a photo of an item and, using Naver’s machine-learning technology, the site populates listings that are the same or similar to the shoe or tank top that they’re searching for. A paid ad feature for sellers called “Promoted Closet,” pushes listings higher on customer feeds.

Poshmark also introduced live shows, some of which are themed, to draw in the TikTok generation and increase engagement. One party auctioned off clothing previously worn by South Korean celebrities, a connection that was made with the help of Naver.

Still, the resale market is going through growing pains and has not quite found its footing since the height of the pandemic. It’s not clear whether the changes taking place at Poshmark will be enough. In May, Mr. Kim, Naver’s finance chief, said in an earnings call that Poshmark’s profitability was improving, but by November, the company was cautioning that growth had slowed because of weakness in the peer-to-peer resale market in North America.

Missteps and Reinvention

The company has already done some backpedaling on unpopular decisions.

In October, Poshmark introduced a new fee structure, which increased costs for buyers. Sellers, fearing that higher costs would make consumers bolt, revolted. Within weeks, the company scrapped the new fee structure.

And there are still user headaches: tags and keywords that help users find what they’re looking for can be miscategorized. Sellers sometimes tag their products incorrectly to get more eyeballs on their less popular products. (Hard-to-offload Amazon leggings, for example, may be listed as Free People apparel.)

The company is beta testing changes with its frequent sellers — people like Alex Mahl, who sells thousands of dollars in apparel on the site each year. And within dedicated Facebook groups related to Poshmark, there’s a lot of chatter about the changes that sellers and buyers would still like to see.

“The only way for it to do well is there’s going to be constant changes,” Ms. Mahl said about the tweaks on Poshmark. “If you were just on an app that never changed — one, it would be boring, and two, the opportunity to just do better wouldn’t be there.”

One recent morning, Ms. Eager, the seller who joined Poshmark back in college, was pleasantly surprised to find that the app had some new features she actually liked. She snapped a photo of her Aerie gray tank top with Posh Lens. Within seconds, the app populated listings of similar products. It was so much better than conjuring up the adjectives needed to describe it.

“Love it,” Ms. Eager exclaimed.

Business

When receipts of home renovations are lost, is the tax break gone too?

Published

4 hours ago

January 12, 2025

Press Room

When receipts of home renovations are lost, is the tax break gone too?

Dear Liz: I have sold my family home recently after almost 50 years. I had done lots of improvements throughout those years. Due to a fire 15 years ago, all the documentation for these improvements has been destroyed. How do I document the improvements for the capital gains tax calculation?

Answer: As you probably know, you can exclude $250,000 of capital gains from the sale of a principal residence as long as you own and live in the home at least two of the previous five years. The exclusion is $500,000 for a couple.

Once upon a time, that meant few homeowners had to worry about capital gains taxes on the sale of their home. But the exclusion amounts haven’t changed since they were created in 1997, even as home values have soared. Qualifying home improvements can be used to increase your tax basis in the home and thus decrease your tax bill, but the IRS probably will demand proof of those changes should you be audited.

You could ask any contractors you used who are still in business if they will provide written verification of the work they performed, suggests Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting. You also could check your home’s history with your property tax assessor to see if its assessment was adjusted to reflect any of the improvements.

At a minimum, prepare a list from memory of the improvements you made, including the year and the approximate cost. If you don’t have pictures of the house reflecting the changes, perhaps friends and relatives might. This won’t be the best evidence, Luscombe concedes, but it might get the IRS to accept at least some increase in your tax basis.

If you’re a widow or widower, there’s another tax break you should know about. At least part of your home would have gotten a step-up in tax basis if you were married and your co-owner spouse died. In most states, the half owned by the deceased spouse would get a new tax basis reflecting the home’s current market value. In community property states such as California, both halves of the house get this step-up. A tax pro can provide more details.

Other homeowners should take note of the importance of keeping good digital records. While documents may not be lost in a fire, they may be misplaced, accidentally discarded or (in the case of receipts) so faded they’re illegible. To make sure documents are available when you need them, consider scanning or taking photographs of your records and keeping multiple copies, such as one set in your computer and another in a secure cloud account.

When an employee is misclassified as contractor

Dear Liz: A parent recently wrote to you about a son who was being paid as a contractor. I know someone else who got a job that did not “take out taxes from his paycheck.” Such workers believe they are pocketing more money, but unfortunately, too many do not know about the nature of withholding. They only learn if they choose to file for their expected refund, but instead discover an exorbitant tax liability that a paycheck-to-paycheck worker cannot pay.

The sad fact is that many of these employers improperly classify their workers, who are truly employees, as independent contractors! And they do this to avoid paying their own portion of Social Security and unemployment taxes and also workers compensation insurance.

If workers believe that they have been misclassified (the IRS website provides all criteria), they can file IRS Form SS-8 and Form 8919, which will allow them to pay only their allocated half of their Social Security taxes. Hopefully the IRS will then contact these employers to correct their wrong classifications. And finally, it should be a law that, when hired, all true independent contractors should be given a clear form (not fine print on their employment agreements) that informs them of their status and the need to make estimated tax payments.

Answer: A big factor in determining whether a worker is an employee or contractor is control. Who controls what the worker does and how the worker does the job? The more control that’s in the employer’s hands, the more likely the worker is an employee.

However, the IRS notes that there are no hard and fast rules and that “factors which are relevant in one situation may not be relevant in another.”

The form you mentioned, IRS Form SS-8, also can be filed by any employer unsure if a worker is properly classified.

Liz Weston, Certified Financial Planner®, is a personal finance columnist. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.

Business

Inside Elon Musk’s Plan for DOGE to Slash Government Costs

Published

15 hours ago

January 12, 2025

Press Room

Inside Elon Musk’s Plan for DOGE to Slash Government Costs

An unpaid group of billionaires, tech executives and some disciples of Peter Thiel, a powerful Republican donor, are preparing to take up unofficial positions in the U.S. government in the name of cost-cutting.

As President-elect Donald J. Trump’s so-called Department of Government Efficiency girds for battle against “wasteful” spending, it is preparing to dispatch individuals with ties to its co-leaders, Elon Musk and Vivek Ramaswamy, to agencies across the federal government.

After Inauguration Day, the group of Silicon Valley-inflected, wide-eyed recruits will be deployed to Washington’s alphabet soup of agencies. The goal is for most major agencies to eventually have two DOGE representatives as they seek to cut costs like Mr. Musk did at X, his social media platform.

This story is based on interviews with roughly a dozen people who have insight into DOGE’s operations. They spoke to The Times on the condition of anonymity because they were not authorized to speak publicly.

On the eve of Mr. Trump’s presidency, the structure of DOGE is still amorphous and closely held. People involved in the operation say that secrecy and avoiding leaks is paramount, and much of its communication is conducted on Signal, the encrypted messaging app.

Mr. Trump has said the effort would drive “drastic change,” and that the entity would provide outside advice on how to cut wasteful spending. DOGE itself will have no power to cut spending — that authority rests with Congress. Instead, it is expected to provide recommendations for programs and other areas to cut.

But parts of the operation are becoming clear: Many of the executives involved are expecting to do six-month voluntary stints inside the federal government before returning to their high-paying jobs. Mr. Musk has said they will not be paid — a nonstarter for some originally interested tech executives — and have been asked by him to work 80-hour weeks. Some, including possibly Mr. Musk, will be so-called special government employees, a specific category of temporary workers who can only work for the federal government for 130 days or less in a 365-day period.

The representatives will largely be stationed inside federal agencies. After some consideration by top officials, DOGE itself is now unlikely to incorporate as an organized outside entity or nonprofit. Instead, it is likely to exist as more of a brand for an interlinked group of aspirational leaders who are on joint group chats and share a loyalty to Mr. Musk or Mr. Ramaswamy.

“The cynics among us will say, ‘Oh, it’s naïve billionaires stepping into the fray.’ But the other side will say this is a service to the nation that we saw more typically around the founding of the nation,” said Trevor Traina, an entrepreneur who worked in the first Trump administration with associates who have considered joining DOGE.

“The friends I know have huge lives,” Mr. Traina said, “and they’re agreeing to work for free for six months, and leave their families and roll up their sleeves in an attempt to really turn things around. You can view it either way.”

DOGE leaders have told others that the minority of people not detailed to agencies would be housed within the Executive Office of the President at the U.S. Digital Service, which was created in 2014 by former President Barack Obama to “change our government’s approach to technology.”

DOGE is also expected to have an office in the Office of Management and Budget, and officials have also considered forming a think tank outside the government in the future.

Mr. Musk’s friends have been intimately involved in choosing people who are set to be deployed to various agencies. Those who have conducted interviews for DOGE include the Silicon Valley investors Marc Andreessen, Shaun Maguire, Baris Akis and others who have a personal connection to Mr. Musk. Some who have received the Thiel Fellowship, a prestigious grant funded by Mr. Thiel given to those who promise to skip or drop out of college to become entrepreneurs, are involved with programming and operations for DOGE. Brokering an introduction to Mr. Musk or Mr. Ramaswamy, or their inner circles, has been a key way for leaders to be picked for deployment.

That is how the co-founder of Loom, Vinay Hiremath, said he became involved in DOGE in a rare public statement from someone who worked with the entity. In a post this month on his personal blog, Mr. Hiremath described the work that DOGE employees have been doing before he decided against moving to Washington to join the entity.

“After 8 calls with people who all talked fast and sounded very smart, I was added to a number of Signal groups and immediately put to work,” he wrote. “The next 4 weeks of my life consisted of 100s of calls recruiting the smartest people I’ve ever talked to, working on various projects I’m definitely not able to talk about, and learning how completely dysfunctional the government was. It was a blast.”

These recruits are assigned to specific agencies where they are thought to have expertise. Some other DOGE enrollees have come to the attention of Mr. Musk and Mr. Ramaswamy through X. In recent weeks, DOGE’s account on X has posted requests to recruit a “very small number” of full-time salaried positions for engineers and back-office functions like human resources.

The DOGE team, including those paid engineers, is largely working out of a glass building in SpaceX’s downtown office located a few blocks from the White House. Some people close to Mr. Ramaswamy and Mr. Musk hope that these DOGE engineers can use artificial intelligence to find cost-cutting opportunities.

The broader effort is being run by two people with starkly different backgrounds: One is Brad Smith, a health care entrepreneur and former top health official in Mr. Trump’s first White House who is close with Jared Kushner, Mr. Trump’s son-in-law. Mr. Smith has effectively been running DOGE during the transition period, with a particular focus on recruiting, especially for the workers who will be embedded at the agencies.

Mr. Smith has been working closely with Steve Davis, a collaborator of Mr. Musk’s for two decades who is widely seen as working as Mr. Musk’s proxy on all things. Mr. Davis has joined Mr. Musk as he calls experts with questions about the federal budget, for instance.

Other people involved include Matt Luby, Mr. Ramaswamy’s chief of staff and childhood friend; Joanna Wischer, a Trump campaign official; and Rachel Riley, a McKinsey partner who works closely with Mr. Smith.

Mr. Musk’s personal counsel — Chris Gober — and Mr. Ramaswamy’s personal lawyer — Steve Roberts — have been exploring various legal issues regarding the structure of DOGE. James Burnham, a former Justice Department official, is also helping DOGE with legal matters. Bill McGinley, Mr. Trump’s initial pick for White House counsel who was instead named as legal counsel for DOGE, has played a more minimal role.

“DOGE will be a cornerstone of the new administration, helping President Trump deliver his vision of a new golden era,” said James Fishback, the founder of Azoria, an investment firm, and confidant of Mr. Ramaswamy who will be providing outside advice for DOGE.

Despite all this firepower, many budget experts have been deeply skeptical about the effort and its cost-cutting ambitions. Mr. Musk initially said the effort could result in “at least $2 trillion” in cuts from the $6.75 trillion federal budget. But budget experts say that goal would be difficult to achieve without slashing popular programs like Social Security and Medicare, which Mr. Trump has promised not to cut.

Both Mr. Musk and Mr. Ramaswamy have also recast what success might mean. Mr. Ramaswamy emphasized DOGE-led deregulation on X last month, saying that removing regulations could stimulate the economy and that “the success of DOGE can’t be measured through deficit reduction alone.”

And in an interview last week with Mark Penn, the chairman and chief executive of Stagwell, a marketing company, Mr. Musk downplayed the total potential savings.

“We’ll try for $2 trillion — I think that’s like the best-case outcome,” Mr. Musk said. “You kind of have to have some overage. I think if we try for two trillion, we’ve got a good shot at getting one.”