The cost to the U.S. economy for the missing paychecks for some 800,000 federal employees who were not paid last week runs to an estimated $4.3 billion. The economy will lose a similar amount for every month that federal workers go unpaid, according to outplacement firm Challenger, Gray & Christmas.
The firm calculated that total based on an average 2013 salary of $62,279 increasing by 1% annually through 2017 and rising by 1.4% in 2018 to a new average of $65.012.19. Subtracting 22% in unpaid taxes, the monthly total for all 800,000 employees, consumer spending of as much as $3.38 billion is missing from the U.S. economy for every month that the shutdown continues.
Adding non-payments to contract workers and the knock-on effects in lost sales at businesses like restaurants that depend on consumer spending, the impact could balloon to more than $5 billion a month, according to Challenger, Gray & Christmas Vice President Andrew Challenger.
Challenger also noted the loss so far in January of 900 jobs in the financial sector resulting from layoff announcements from Bank of New York Mellon and investment firm BlackRock.
Another high-profile firing announcement came from privately held SpaceX, which revealed the firing of 10% of its workforce (about 700 people) as the firm cuts expenses. How much of the impact is due to the government shutdown is not known. SpaceX won a $130 million Air Force contract last June to launch a classified military satellite into space in September of 2020.
Most military programs are not affected by the federal shutdown, although active duty personnel, like their civilian counterparts, are not being paid. Unless Congress acts to pay active duty military, U.S. troops will get a partial paycheck on February 1 for days worked prior to January 20.
Active duty U.S. Coast Guard members, all 42,000 of whom have been working without pay during the shutdown, missed their first paycheck on Tuesday. The Coast Guard is part of the Department of Homeland Security, which is not funded during the shutdown, unlike the Department of Defense, which is.
Military veterans and retirees are continuing to receive their benefits, and most Veterans Administration medical facilities continue to operate during the shutdown.
Get Ready To Retire (Sponsored)
Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Get started right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
