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Government shutdown becomes longest in U.S. history, enters ‘uncharted territory’

Jeff Estes has worked as a federal contractor for 35 years in Cape Canaveral, Florida. Now he and his colleagues are out of work because of a partial government shutdown that as of Saturday became the longest in American history.

For Estes, a union official and electrician, the shutdown is becoming particularly burdensome because he’s paying for his two kids to attend college, and the government’s recent decision to change contractors forced him and his coworkers to reapply for their jobs.

With much of the government at a standstill, Estes and his colleagues — members of the International Association of Machinists and Aerospace Workers — aren’t sure whether they will still have a job when it’s over, he said. Those in a position to know are furloughed, leaving Estes and many others more than frustrated as the government shutdown enters its 22nd day on Saturday.

“It’s not a D problem. It’s not an R problem. It’s Washington, D.C., the Beltway,” Estes told NBC News. “People in America and the workforce should not be used as pawns. Deal with your business without putting me out of the job. Do your job, and I’ll keep doing mine.”

Approximately 800,000 federal employees are estimated to be furloughed or working without pay because President Donald Trump and Congress cannot reach a deal to reopen the government. They are at an impasse over $5.7 billion for construction of a wall along the southern border.

The number of furloughed employees does not include federal contractors like Estes. It’s unclear how many contract or grant employees are affected by the shutdown — or even how many there are in total — but a Volcker Alliance report estimated that nearly 5.3 million worked as contractors in 2015.

Unlike furloughed federal employees, who have received assurances that they will be paid once the shutdown ends, contractors are not owed back pay. That has left them in an even murkier economic position.

Most Americans cannot afford to miss a paycheck, said Joseph Stiglitz, an economics professor at Columbia University whose work relating to inequality earned him the Nobel Memorial Prize in Economics.

While everyone tends to have a house, car, health insurance and car payment to make, the person they owe money to aren’t inclined to be particularly forgiving or account for a government shutdown, Stiglitz said.

“It’s an inequality issue in that it affects people at the bottom,” Stiglitz said. “And it hits them really strongly because in America, so many have experienced such high levels of inequality that a large fraction of Americans have no substantial cash reserves. They depend on that paycheck coming in every month.”

Sen. Lisa Murkowski, R-Alaska, said she knows the shutdown is having a significant impact on her state, telling NBC News that she has spoken to a number of constituents since the shutdown took effect.

Image: Union Organizers In Washington, D.C. Hold Rallies Calling For End To Government Shutdown

Her state is feeling the economic pain from the ongoing political fight more than most. Alaska has the most federal workers affected per capita than any other state, and nearly half the federal workers there work for agencies without appropriations.

“They’re the ones who are trying to knit this all together, that are trying to figure out, ‘OK, we’ve got earthquake damage that we’re dealing with and it’s costing us more than we thought it was going to,” Murkowski said. “It’s cold. It’s four below in Fairbanks, where I went to high school, this morning. You don’t think that jacks up people’s home heating like sky high?”

That could be a reason for economic concern beyond just the individual household, particularly in small communities where businesses are dependent on those individuals spending their paychecks.

“When individuals are living as close to the edge as such a large fraction of Americans are living, these are the kinds of events that can precipitate a downward spiral,” Stiglitz said.


The shutdown isn’t affecting only labor, either.


And as the shutdown continues further without a clear potential conclusion after the president threatened to keep the government closed for months or even years, experts say the economic ripple effects could heavily impact the entire nation.

Jason Furman, professor of the practice of economic policy at Harvard Kennedy School and the most recent chairman of the Council of Economic Advisers under President Obama, said the nation is “entering increasingly uncharted territory.”

“The impact really depends heavily on how the highly ambiguous rules are interpreted and implemented by the administration, for example the decisions around SNAP and refund checks matter a lot,” Furman said in an email. “Overall, however, we know that the costs of the shutdown grow non-linearly with time as agencies run out of ways to get around it. So expect them [agency costs] to grow.”

It’s the uncertainty that leaves a lot of experts worried about the economic impact that a prolonged shutdown could have, especially during a period of global market uncertainty.

Currently the country faces a trade war, stock market uncertainty, an economic slowdown in China and an economic slowdown in Europe — two key trading partners.

“No time is a good time, but this is a particularly bad time because the nature of uncertainty is that it compounds exponentially,” Stiglitz said.

“We’re talking about $5.7 billion for a wall,” the economist added, “but the costs that are inflicted on the economy are orders of magnitude beyond that $5.7 billion.”

NBC News

NBC News

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