UNEMPLOYMENT / JAN. 16, 2014
version 4, draft 4

Government Shutdown - The Aftermath

goverment shut down

For more than two weeks in October 2013, the United States federal government was closed for business. The infamous government shutdown, which essentially occurred because Democrats and Republicans couldn’t agree upon a budget, and more so because Tea Party conservatives like Senator Ted Cruz (R - Texas) were eager to punish their political opponents by forcing a shutdown, had a serious impact upon the nation’s economy, impacted U.S. credibility on the world stage, and angered voters across the political spectrum.

Most of us don’t spend much time thinking about how political fights in Washington impact our daily lives. While almost everyone holds political opinions, our day-to-day experience is usually more focused more on getting the kids to school on time, doing our job at work, paying our bills, picking up the milk on the way home. During the two weeks of the shutdown last October, however, federal politics intruded into our lives and our living rooms in a very real, tangible way.

Furloughed Government Workers

Let’s start examining the impact the shutdown had by looking at whose jobs were directly affected by the government shutdown.

● Over 800,000 federal workers were furloughed during the shutdown.

● At the shutdown’s peak, that number rose to 850,000.

● Another 1.3 million were told that they had to report to work but might not be paid in a timely fashion.

● The cost of lost productivity was estimated at $2 billion.

● Notably, Congress continued to get paid during the two weeks of the shutdown. A few members of Congress chose to forego their paychecks in a gesture of solidarity with other federal workers.

Furthermore, the Office of Management and Budget has hypothesized that one long-term effect of the shutdown could be the inability to attract and retain talented federal workers (Source: WhiteHouse.gov).

Effects on Other Businesses and Employees

Although federal workers were the first wave of workers to be negatively impacted by the government shutdown, it certainly wasn’t just the public sector that suffered as a result of Congress’ inability to reach a deal. Private sector businesses that depend upon government contracts or have customers who are government workers also took a big blow during and after the shutdown. Aircraft manufacturer and defense contractor Lockheed Martin, for example, also furloughed workers as a result of the government shutdown.

The ripple effect extended past big corporations like Lockheed Martin, though. Even small businesses, such as outdoor adventure tour operators who take customers through national parks, took a big financial hit as a result of the shutdown.

Effects on the Unemployed

Immediately following the government shutdown in October, unemployment rates jumped. While supporters of the shutdown might point out that unemployment numbers around the shutdown were unfairly inflated due to temporarily furloughed workers increasing the count of the unemployed, a report from November 2013 suggests that the impact on unemployment went well beyond the furloughs. According to the report, created by the Office of Management and Budget, 120,000 fewer private sector jobs were created during October 2013 as businesses tried to cope with the uncertainty created by the shutdown (Source: Huffington Post).

At the time of writing, another deadline looms for the government to avoid a January 2014 shutdown. Regardless of their political affiliations, Americans who lived through the unpredictable weeks of October 2013’s shutdown are keen to avoid another shutdown in 2014. Shutdowns impact the whole economy, both the employed and the unemployed, both public sector and private sector. In all, economists believe that 2013’s shutdown took a $24 billion bite out of the U.S. economy; hopefully, Congress won’t make the same mistake again in 2014.

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