Government shutdown costs $12.5 million per hour

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ELON, N.C. -- The government shutdown is costing about $12.5 million per hour, according to information from IHS Global Insight, a marketing research group.

Dr. David Ribar with UNCG explained the estimates mean the U.S. economy is directly losing approximately $300 million each business day or about $1.6 billion each week that the shutdown continues.

"Put another way," said Dr. Ribar, "Each week of shutdown would directly trim 0.16 percent from economic growth in the fourth quarter. Annualized growth is currently about 2.5 percent per quarter."

He added, "The word 'directly' is emphasized because these estimates only refer to lost output from federal employees and do not account for the increased uncertainty and anxiety caused by the shutdown, reduced spending by government contractors, reduced output by workers who rely on government services, or multiplier effects. So $300 million a day is a low estimate," he said.

Jason Husser is Assistant Professor of Political Science at Elon University. He said it's hard to put a price tag on the long-term impact of a shutdown, but that it's certainly costing money.

"The government shutdown was never intended to actually save money. It was really intended as a very blunt force negotiation technique," said Husser. "It's not just like you turn off the lights and lock the door. The government is extraordinarily complex. That means for instance the National Park? They need to tell people to leave the parks. Try to find everyone in a national park and tell them to leave. That costs money in and of itself."

The President and Congress along with federal employees considered essential are still working, but they may not get paychecks on time.

"For instance, members of the military are supposed to getting paid. However, when you have a skeleton crew throughout the entire federal government, all kinds of bizarre inefficiencies start to emerge. That can mean delayed paychecks. That can mean websites crash that should not crash," Husser explained.

Employees who worked up until the government shutdown will get paychecks for that last pay period, but the money could be delayed. Agencies were instructed only to keep on enough personnel to process payroll, which means fewer people could be doing more work.

Approximately 800,000 federal workers are furloughed and were told not to come to work. Dr. Ribar said that's about a third of the federal workforce.

Furlough days mean non-paid days, which could be especially detrimental to mid and low-income employees.

"In previous shutdowns, provisions were made to pay furloughed workers retroactively. However, any retroactive pay would require a special legislative provision, and in the current politically charged environment, it's not at all certain that such a provision would be passed," Dr. Ribar said.

Husser agreed. "In the 1995 and 1996 shutdown, the government did pay furloughed employees. It's not clear to me that's going to be the case this time."

"Although the retroactive pay would make the furloughed employees whole, taxpayers would still lose out on the services that the employees normally provide," concluded Dr. Ribar.

Husser also believes the impact of the current shutdown could be much worse this time around. "The economy was much more robust in the last shutdown. Unemployment is higher now than it was then, and GDP growth is lower than it was in 1995 and 1996."

Funding the Affordable Care Act is at the center of debate for this government shutdown. Appropriately, Husser used medical terms to explain the situation. "Right now, after two days? The shutdown is basically a bad head cold for the government. If it goes on? It will become the full-blown flu."

The U.S. Office of Personnel Management's handbook outlining the federal Guidance for Shutdown Furloughs has more information about who will be paid, why, and when:

http://www.opm.gov/policy-data-oversight/pay-leave/furlough-guidance/guidance-for-shutdown-furloughs.pdf

 

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