The Federal government shutdown hurt more than just direct employees and government services. While many expected that the failure in Congress would foul up the weak but recovering economy, no one anticipated how much damage would be done.
With 800,000 employees laid off across the system, the shutdown literally had a huge impact on hundreds of communities across the nation.
When the October 2013 jobs report was released from the federal Department of Labor, the effect of the shutdown was confirmed. However, where most general readers expected that the unemployment figures would go up, they did not expect jobs reported to go up as well. The number of temporary workers also went up as people scrambled to find temporary employment, using sites like www.job-applications.com to find work.
In the case of the October jobs report, the Labor Department tracked how many workers were employed per payroll figures and how many were unemployed. However, federal government workers were both laid off and then rehired a few weeks later, allowing them to be counted in both labor groups. The result ended up producing a confused labor report picture.
The longer term impact of the government shutdown has to do more with how much spending was lost due to employees not being paid, being unable to pay their own bills, and being unable to keep supporting the community businesses they frequent during otherwise normal daily life. The $55 billion impact includes:
- Financial damage to local businesses that lost orders and sales, particularly food businesses, during the shutdown. These are companies and mom-and-pop outfits that live and thrive on regular, daily sales. With 78 percent of federal government employees working outside the Washington D.C. zone, the hit was nationwide. Restaurants and food providers frequented in the morning and at lunch were hit particularly. Those same federal workers did go back to their spending habits again when back at work, but the few weeks of business lost won’t be replaced. It’s a permanent revenue loss for affected small businesses.
- Bills that were owed became delinquent, interest accrued on debt extended longer than normal, and families cut back on spending for fear of going bankrupt. While federal employees did go back to work and will be paid for their time laid off, the disruption still has an unreimbursed cost. When added up in the aggregate, the damage will likely add to the millions of dollars due to cash flow disruption.
- The opportunity loss hampered economic growth by $24 billion in just the two weeks of the shutdown. Even though federal employees were ultimately rehired, it is unlikely they will make up for the retail spending that was cut back during the unemployment period. As a result, companies on the street and online all suffered from a permanent loss of sales to the tune of 0.6 in GDP growth. This included impacts to durable goods producers, travel and vacation, fuel, food, and entertainment industries.
Sherry Black
Sherry is a well-rounded writer from the Bay area.