Days Into the Shutdown, the Costs Are Mounting

Government shutdowns are expensive.

For government workers, the costs are personal—the mortgage payments, school tuition and utility bills will keep coming, even if paychecks are disrupted. Feds may eventually be compensated for lost wages (Congress has authorized retroactive pay for furloughed workers during past shutdowns), but if the shutdown drags on, the interim budget squeeze and uncertainty will undoubtedly impact morale, and for some, financial stability.

The Office of Personnel Management on Thursday tweeted this advice for federal workers:

Feds, here are sample letters you may use as a guide when working with your creditors during this furlough. If you need legal advice please consult with your personal attorney. https://t.co/t6h6OzALsS

— OPM (@USOPM) December 27, 2018

But the impact of a government shutdown, even a partial shutdown, is felt far beyond the affected workers and agencies themselves. The contract workers, the janitors who clean federal buildings, the small business owners who staff the lunch joints and dry cleaners that serve federal employees all will take a hit. Scientific research will be hurt (96 percent of NASA personnel faced furloughs). Local transportation projects will grind to a halt.

Some agencies face critical revenue losses, such as the National Park Service, which will not be able to collect access fees during the shutdown. Adding insult to injury, the clean up that will be required after the parks resume full operation promises to add considerably to the park service’s maintenance backlog.  

State and local governments are also feeling the pain. As Route Fifty reported, the closure of national parks over the Christmas holiday left some states scrambling to cover for Interior Department furloughs: Arizona Gov. Doug Ducey announced that his office would activate a plan to keep the Grand Canyon open, ensuring trash pickup, bathroom access and shuttles, along with other services. New York Gov. Andrew Cuomo said the state would spend $65,000 a day to keep open the Statue of Liberty and Ellis Island, while Utah Gov. Gary Herbert also said that parks would be open, although staffing could be limited.

Steve Benjamin, president of the U.S. Conference of Mayors and mayor of Columbia, South Carolina, told Route Fifty that a longer shutdown, could affect a variety of local government programs, from job training to transportation. “There are roads projects happening all across the country right now, some of which depend on federal funding or federal approvals.” Benjamin said. “If leadership is MIA because of a shutdown, it could have a significant impact.”

Following the 16-day government shutdown in 2013, the Government Accountability Office analyzed the impact on operations, contracts and grants at three departments: Health and Human Services, Energy and Transportation. Of those three, only Transportation is affected by the current shutdown, but the findings are instructive, as they illustrate the ripple effects that few politicians seem to fully appreciate. Transportation had to close its Merchant Marine Academy, significantly disrupting students’ lives. The Federal Transit Administration had to stop processing grants and making payments to recipients.   

According to GAO, the impact on industry varied and was difficult to fully measure:

Some contractor employees were reportedly laid off during the shutdown and furloughed contractor employees were not necessarily paid by their employer during or after the shutdown. For furloughed contractors, several circumstances influenced whether they could be paid during the shutdown, including whether work was allowable based on the terms of the contract that they worked on, the availability of other assignments, and whether their company chose to or was able to compensate them out of its own pocket if contract funds were unavailable . . . In addition to furloughs, some companies with affected contracts required employees to use leave or take paid or unpaid time off if they were unable to reassign employees to training or other nongovernment projects.

At least eight states furloughed state employees during the shutdown, GAO found, because of their reliance on federal grants.

According to an official from one national association representing recipients of federal transportation grants that we interviewed, transportation entities which use the funding for operational costs were especially vulnerable. Some local paratransit services which provide transportation to seniors and persons with disabilities, including providing the elderly with rides to doctors’ appointments, expressed concerns about possible disruptions stemming from a lack of funding if the shutdown continued. During the shutdown, the association officials said that some of these entities had developed plans to prioritize life sustaining travel, but that their flexibility to continue operations was limited if the shutdown continued.

Although there are limitations to comparing the current partial government shutdown to the 2013 shutdown (that shutdown affected most federal agencies), the message is clear. Government Executive reported on an analysis by the Congressional Research Service following the 2013 shutdown, which found that while federal spending—including the retroactive pay to furloughed employees—was eventually restored, “the loss of work hours could not be similarly reinstated. The ‘supply’ created by the government was irreversibly diminished as furloughed federal workers could not contribute to the production of government output while out of work.”