As the partial government shutdown enters Day 14, its effects are starting to cascade far beyond the hulking agency buildings in Washington. Private companies with federal contracts are coping with chaos, confusion and uncertainty, while businesses large and small that rely on the operations of the vast federal bureaucracy are starting to feel sand in their gears.
Sen. Richard C. Shelby (R-Ala.) predicted Thursday that the shutdown could last for “months and months.” While the broader U.S. economy has yet to feel sharp effects from the scaled-down federal government, economist Mark Zandi of Moody’s Analytics said that the impact could be significant if the shutdown drags on.
“If it extends into the spring, it’ll start to do real damage and have real impact, because it probably signifies other things are going off the rails — the acrimony in Washington is run amok,” Zandi said.
It’s difficult to know how that disruption might play out, he added.
“Take the housing market, for example. The fact that the IRS isn’t open and verifying tax returns and W-2 statements may mean that we might not get home closings,” he said. “The housing market could be severely disrupted, particularly during the spring selling season.”
The shutdown is also affecting workers up and down the pay scale. In addition to the approximately 800,000 federal workers who are either furloughed or facing the prospect of working without pay, low-wage employees such as cafeteria workers and custodial staffers work for private contractors that — unlike federal employees — have little hope of getting back pay when the shutdown ends.
Pablo Lazaro, 49, works full time at the Smithsonian’s National Museum of the American Indian, but the museum hasn’t been open since New Year’s Day. His employer, Restaurant Associates, is a contractor that manages Smithsonian cafeterias.
“It’s really sad because most of the cooks, they have only one job. I’m lucky because I have a second job,” said Lazaro, who works the evening shift at Grille District at Reagan National Airport. Lazaro, who is married with two daughters, said his family cut back on expenses a month ago, buying less expensive Christmas gifts. His older daughter got a $100 used iPhone for Christmas instead of a new one.
“It isn’t connected yet. There is no line. I can’t afford it right now,” he said. “But she’s happy.”
The partial shutdown that began Dec. 22 has really been a sequence of shutdowns. The early repercussions were muted by the holidays and by the ability of some institutions, national parks and agencies to remain at least partially operational for a few days or longer through table-scrap funding, volunteer help and donations. But the budgetary squeeze is intensifying. The National Gallery of Art in Washington closed Thursday, a day after a similar move by the Smithsonian Institution’s many museums and the National Zoo.
“It’s really only yesterday and today that things are getting out of holiday mode and into serious business,” said David Berteau, president and chief executive of the Professional Services Council, which represents about 400 firms that contract with the federal government. “For many agencies affected by the partial shutdown, their flexibility has been used up. And now they’re having to start issuing more stop-work orders, with no end predictably in sight.”
Contractors — including security guards, suppliers and researchers — form a vast shadow government and must abide by byzantine regulations about whether and how to continue operations during a funding shortfall. The contractors have expanded in size and power in recent decades in a push by small-government conservatives to outsource federal functions to the private 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 C. Light.
The federal government spends about $300 billion a year just on contracts for services, Berteau said.
“This shutdown is harder in two ways. One is the uncertainty of how long it’s going to last and when it’s going to end. The other is the ambiguity, because it’s partial — it’s not a full government shutdown,” he said. “There’s insufficient communication from the government to the companies over what to plan for.”
Unlike federal civil servants, private-sector workers have limited expectation of receiving back pay from Congress or their employers when the shutdown ends.
“I don’t think there’s any way I can get back pay,” said Daniel Highlands, 45, a contractor who handles fraud analysis in the Boston office of the Securities and Exchange Commission and earns $50,000 a year. “I wouldn’t say that I live paycheck to paycheck, but missing one could really hurt.”
Federal contractors often work side by side with civil servants and sometimes feel as if they are second-class citizens. The jobs can be unstable, particularly for people working for small companies.
The government relies heavily on this shadow workforce not just to clean offices and prepare food in cafeterias but to provide expertise that the government lacks, particularly in hard-to-hire areas such as engineering and information technology, where federal agencies have lagged behind the private sector.
The shutdown will affect scientific research across the country. Major conventions scheduled for the coming days — such as ones held by the American Meterological Society and the American Astronomical Society — will be disrupted by the absence of government scientists who are not allowed to travel or perform any work.
Anne Jefferson, associate professor of geology at Kent State University, teaches a watershed hydrology class that requires students to use data from the National Oceanic and Atmospheric Administration website over the course of the semester. But when students go to the website to do their work, data no longer pops up.
Instead there’s a notice that says, “Access is not available at this time due to a lapse in appropriation.”
Jefferson said university professors who use such federal data — deemed to be nonessential under the rules of the partial government shutdown — may soon have to restructure their coursework if the shutdown continues. And Jefferson said that graduate students will have to rethink their research projects or risk missing deadlines. Jefferson is facing a Jan. 31 deadline for a research project that she is required to write with a furloughed government scientist.
“I can’t talk to her,” Jefferson said. “Do we continue to work on the proposal without her? Do we throw in the towel? If we do, that opportunity will be moved back a year. We lose out and science loses out.”
Florida-based Food and Drug Administration consultant Daniel Kamm said he can no longer submit applications for new medical devices while the government is closed. A diagnostic X-ray machine and an accessory for a defibrillator are among the devices that are now on hold.
“I’m afraid there will be a backlog when they reopen,” Kamm said. He noted that he was able to pay annual registration fees to the FDA for several foreign companies so they can continue to sell their FDA-approved devices in the United States. However, it is still technically illegal for them to do so because no one at the FDA has processed their 2019 registrations.
“The funny thing is they accept my money, but they aren’t providing the service,” Kamm said.
Richard Furstein, 26, who leads tours around Independence Mall in Philadelphia, said business has suffered and visitors have complained about closed facilities. Normally in January and February people can enter Independence Hall, but the building is closed, he said. And they can’t get up close to the Liberty Bell, either. They can view it only through windows that do not provide a good angle on the famous crack in the bell.
Visitors from Australia and New Zealand recently said they were disappointed with the closures, and one offered a rather tart observation, Furstein recalled, saying, “Your country broke off because of a minor tax disagreement, and now your government is closed because of a minor wall disagreement.”