How does the US gov­ern­ment shut­down af­fect the pri­vate sec­tor?

The National - News - - BUSINESS - Kelsey Warner

As the US gov­ern­ment shut­down grinds into its fourth week, it has the dis­tinc­tion of be­ing the long­est in Amer­i­can his­tory.

What does it mean for Amer­i­can work­ers?

Of the 800,000 fed­eral em­ploy­ees, half are fur­loughed with­out pay and the rest are work­ing un­paid. While these are pub­lic em­ploy­ees, the ab­sence of this work­force – and the funds they dis­trib­ute to con­trac­tors – is hav­ing a rip­ple ef­fect on the pri­vate sec­tor.

In the fis­cal year that ended Oc­to­ber 1, the most re­cent data avail­able show, the 13 gov­ern­ment agen­cies af­fected by the shut­down were com­mit­ted to pay $89.3 bil­lion to con­trac­tors, or an av­er­age of $245 mil­lion per day, ac­cord­ing to Bloomberg. The Depart­ment of Home­land Se­cu­rity, Nasa, and the State Depart­ment ac­counted for more than half of that.

Con­trac­tors – from se­cu­rity guards at air­ports to can­cer re­searchers – are in­ex­tri­ca­bly linked to the pub­lic sec­tor. Four out of ev­ery 10 peo­ple who work for the fed­eral gov­ern­ment are pri­vate con­trac­tors, ac­cord­ing to 2017 re­search by New York Univer­sity pro­fes­sor Paul Light. Even gov­ern­ment data used by de­vel­op­ers, sci­en­tists and econ­o­mists is unavail­able, putting work on hold, re­ported The Wash­ing­ton post.

What is the out­look if the shut­down con­tin­ues?

If the shut­down con­tin­ues, it could dent the monthly jobs re­port. “If the gov­ern­ment re­mains closed past Jan­uary 19, then fur­loughed fed­eral work­ers will not re­ceive pay dur­ing the sur­vey week, mean­ing that we’d very likely get a big drop in the head­line pay­rolls re­port, some­thing on the or­der of per­haps 500,000 to 600,000,” Omair Sharif, se­nior US econ­o­mist at So­ci­ete Gen­erale in New York, told Reuters.

It would be the first monthly de­cline in em­ploy­ment since Septem­ber 2010, end­ing a streak of 99 straight months of job gains. While the shut­down has so far had a mi­nor ef­fect on the econ­omy, if it con­tin­ues, Moody’s An­a­lyt­ics fore­casts the shut­down will slow eco­nomic growth na­tion­ally by about 0.04 per­cent­age points for ev­ery week that it lasts, cut­ting into sales-tax rev­enues for states and cities. With bud­get uncer­tainty, states may slow the pace of work on in­fra­struc­ture projects be­cause they can’t say for sure how much they will get once the bud­get im­passe ends.

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