News - Titles Only

Federal Shutdown is Over, but Harm Hit Home

March 14, 2019

by Betsy Hammer, Minnesota Budget Project

The partial federal government shutdown that began on December 22, 2018, and concluded on January 25 of this year was the longest on record. Federal policymakers reached a deal on the remaining areas of the budget, and another shutdown has been averted. However, the lengthy shutdown caused real and significant harm to people – particularly those in the worst position to weather the storm – and the economy as a whole.

The shutdown caused very real impacts to our Minnesota neighbors. Two important programs that low-income families use to put food on the table were in jeopardy: the Supplemental Nutrition Assistance Program (SNAP), which helps nearly 500,000 Minnesotans afford groceries each month, and WIC, the Women, Infants, and Children program, through which 100,000 Minnesota kids and moms per month afford nutritious food. In the case of SNAP, payments were distributed on a different schedule during the shutdown to ensure that families could continue to grocery shop – which will result in a larger than normal gap between receiving February and March payments for many families. Had the shutdown continued, both SNAP and WIC would have depleted reserves to the point that families would have received reduced money for food.

Services that provide families with affordable homes and shelter were also at risk during the shutdown. More than 93,000 Minnesota households have a roof over their heads thanks to federal housing assistance, and more than 90 percent of those households include kids, elderly people, or people with disabilities. In the event of an extended federal shutdown, depending on contract and lease timelines, families start facing extreme increases in rent and possible evictions as the federal funding runs out; the timelines vary by program. In addition, billions of federal dollars aimed at tackling persistent homelessness across the county would also be at risk during a shutdown.

Most health care programs were not affected by the partial shutdown. However, the Indian Health Service (IHS) did experience shutdown impacts. Due to the unique relationship between the United States government and federally-recognized Tribal governments dating back hundreds of years and many treaties, this federal agency provides health care to American Indians and Alaska Natives. During the shutdown, workers in the Indian Health Service – including many medical professionals directly providing health care – had to work without pay. Minnesota has 11 federally recognized Tribes and three direct service programs, where about 500 employees provide health care and support services.

Federal and contract workers also suffered hardships: 800,000 federal employees did not get paid. Federal contractors, many of whom serve in low-wage roles like food service or sanitation, did not get paid and will likely not be eligible for backpay. Over 5,000 Minnesotans are federal workers who went without pay due to the shutdown; the number of federal contractors in the North Star State is unknown. Some corporations offered payment relief or deferrals for those workers affected by the shutdown. However, personal financial obligations don’t pause just because the paychecks did: rent or mortgage payments are still due, car payments must be made, groceries still cost money, credit card bills continue to rack up interest, and child care providers require payment so kids don’t lose their spots. Those obligations add up and put significant pressure on family budgets.

The direct impacts of a shutdown are not shared equally: African American workers are more likely to be federal workers. According to U.S. Office of Personnel Management 2016 data, African Americans make up over 18 percent of the federal workforce, compared to 11 percent of the civilian labor force. African American women compromise nearly 11 percent of the federal workforce but about 6 percent of the civilian labor force. The lengthy history of discriminatory practices and racial disparities in savings and wealth-building also make it more challenging for workers of color to cover gaps in pay.

The shutdown also had an impact on the economy as a whole. White House economic experts estimated the shutdown would result in a 0.1 percentage point drop in economic growth each week during the shutdown, due to both direct and indirect impacts.

The full economic effect of the shutdown will take time to unfold. Meanwhile, Minnesota’s state economy is intrinsically tied to the national economy, and slower economic growth could cause damage at the state level, too. State economic experts include national economic data in their models to project state economic data and growth. The monthly state economic update showed a softening in state revenue projections prior to the federal shutdown, and the state’s February forecast also showed slower economic growth and an overall softening.

Minnesotans experienced tangible hardships during the federal shutdown, and the effects were greatest for those least able to afford it. It’s a good thing that a deal was reached to fund the budget and avoid a continued shutdown. However, the unrelated anti-immigrant policies that tangled the budget negotiations continue to be prominent on the national stage. The right solution is to avoid another round of shutdown showdown politics at the next round of negotiations later this year – and keep the government open with a clean funding plan.

News - Titles Dates, and Summaries

Federal Shutdown is Over, but Harm Hit Home

March 14, 2019

by Betsy Hammer, Minnesota Budget Project

The partial federal government shutdown that began on December 22, 2018, and concluded on January 25 of this year was the longest on record. Federal policymakers reached a deal on the remaining areas of the budget, and another shutdown has been averted. However, the lengthy shutdown caused real and significant harm to people – particularly those in the worst position to weather the storm – and the economy as a whole.

The shutdown caused very real impacts to our Minnesota neighbors. Two important programs that low-income families use to put food on the table were in jeopardy: the Supplemental Nutrition Assistance Program (SNAP), which helps nearly 500,000 Minnesotans afford groceries each month, and WIC, the Women, Infants, and Children program, through which 100,000 Minnesota kids and moms per month afford nutritious food. In the case of SNAP, payments were distributed on a different schedule during the shutdown to ensure that families could continue to grocery shop – which will result in a larger than normal gap between receiving February and March payments for many families. Had the shutdown continued, both SNAP and WIC would have depleted reserves to the point that families would have received reduced money for food.

Services that provide families with affordable homes and shelter were also at risk during the shutdown. More than 93,000 Minnesota households have a roof over their heads thanks to federal housing assistance, and more than 90 percent of those households include kids, elderly people, or people with disabilities. In the event of an extended federal shutdown, depending on contract and lease timelines, families start facing extreme increases in rent and possible evictions as the federal funding runs out; the timelines vary by program. In addition, billions of federal dollars aimed at tackling persistent homelessness across the county would also be at risk during a shutdown.

Most health care programs were not affected by the partial shutdown. However, the Indian Health Service (IHS) did experience shutdown impacts. Due to the unique relationship between the United States government and federally-recognized Tribal governments dating back hundreds of years and many treaties, this federal agency provides health care to American Indians and Alaska Natives. During the shutdown, workers in the Indian Health Service – including many medical professionals directly providing health care – had to work without pay. Minnesota has 11 federally recognized Tribes and three direct service programs, where about 500 employees provide health care and support services.

Federal and contract workers also suffered hardships: 800,000 federal employees did not get paid. Federal contractors, many of whom serve in low-wage roles like food service or sanitation, did not get paid and will likely not be eligible for backpay. Over 5,000 Minnesotans are federal workers who went without pay due to the shutdown; the number of federal contractors in the North Star State is unknown. Some corporations offered payment relief or deferrals for those workers affected by the shutdown. However, personal financial obligations don’t pause just because the paychecks did: rent or mortgage payments are still due, car payments must be made, groceries still cost money, credit card bills continue to rack up interest, and child care providers require payment so kids don’t lose their spots. Those obligations add up and put significant pressure on family budgets.

The direct impacts of a shutdown are not shared equally: African American workers are more likely to be federal workers. According to U.S. Office of Personnel Management 2016 data, African Americans make up over 18 percent of the federal workforce, compared to 11 percent of the civilian labor force. African American women compromise nearly 11 percent of the federal workforce but about 6 percent of the civilian labor force. The lengthy history of discriminatory practices and racial disparities in savings and wealth-building also make it more challenging for workers of color to cover gaps in pay.

The shutdown also had an impact on the economy as a whole. White House economic experts estimated the shutdown would result in a 0.1 percentage point drop in economic growth each week during the shutdown, due to both direct and indirect impacts.

The full economic effect of the shutdown will take time to unfold. Meanwhile, Minnesota’s state economy is intrinsically tied to the national economy, and slower economic growth could cause damage at the state level, too. State economic experts include national economic data in their models to project state economic data and growth. The monthly state economic update showed a softening in state revenue projections prior to the federal shutdown, and the state’s February forecast also showed slower economic growth and an overall softening.

Minnesotans experienced tangible hardships during the federal shutdown, and the effects were greatest for those least able to afford it. It’s a good thing that a deal was reached to fund the budget and avoid a continued shutdown. However, the unrelated anti-immigrant policies that tangled the budget negotiations continue to be prominent on the national stage. The right solution is to avoid another round of shutdown showdown politics at the next round of negotiations later this year – and keep the government open with a clean funding plan.

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