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What is a Government Shutdown and What Does it Mean for the Average American?


Last week, the government averted a potentially precarious government shutdown at the eleventh hour, literally. I live and study in the Washington, D.C. area, and I can attest to the fact that a government shutdown has been the buzz for weeks now and does affect many of the families. It most certainly hits close to home.


But what is a government shutdown, and what does it mean for the average American? A shutdown takes place when Congress is unable to pass a funding legislation. When this happens, certain federal employees, usually those that are involved in non-essential operations, are temporary halted until a new financing agreement or legislation comes into effect. During this period, such employees are not paid. However, certain systems such as health programs, Social Security, and Medicare are placed on hold as well.

The direct impact of a government shutdown on federal employees and their families is a no-brainer. Missing out on two or three paychecks may mean such employees may not make timely rent or mortgage payments as well as reduced spending. Certain government agencies temporarily halting operations hurts struggling families that rely on government aid. An example is the Women, Infants, and Children (WIC) Program, which provides funding to low-income women or families whose children are at an increased risk of nutritional risk. Even housing vouchers for seniors, veterans, and low-income families will be at risk as well.


The longer the shutdown stays in place, the more widespread the effect is. The longest government shutdown of 2018-2019, which lasted for 35 days, lowered the projected level of Gross Domestic Product (GDP), or the overall economic output, by 0.2 percent. The said shutdown wiped out almost $11 billion in output. During this time, the tourist area of D.C. was described as “borderline comatose” with a quiet downtown and trash piling up around the area.

During the 2018-2019 shutdown, many basic services such as trash pick-up was an afterthought, as federal contractors became affected as well.

The federal government employs around 2 million civilian employees nationwide with about 1.4 million active duty military personnel. While the Washington, D.C./Maryland/Virginia federal employees are hit hardest, the effects of the shutdown reverberates throughout the country as well.


The question is, will everyone get paid once the shutdown is lifted? The answer is yes and no. Federal employees will get paid, thanks to a legislation passed in 2019. Government contractors however, may or may not be paid. These workers are not direct federal employees but work for companies that directly support the federal government. Some of these contractors have white collar jobs with certain safety nets in place, but a vast majority of these employees are low-wage workers such as security guards and janitorial staff.


In sum, shutdowns are most certainly unwanted guests, and while Americans have no control over it, it has become part of our lives much more recently. This underscores an important part of economics…that politics and economics are inextricably linked and each affect each other in so many ways, both good and bad.


So for now, the crisis is averted, but it all depends on whether or not Congress will arrive at a favorable decision by the end of the month. Until then, all we can do is to keep our fingers crossed.
























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