The Shutdown Is Hammering Low-Wage Federal Contract Workers
Just days after analogizing federal employees' unpaid furloughs to hundreds of thousands of free vacations, White House economic advisor Kevin Hassett continued his exhibition of deft public relations skills on Tuesday, acknowledging that the administration underestimated the shutdown's impact on economic growth because, in an admission that is just a little too on the nose, they forgot that government contractors exist. From CNN:
If government workers don't go to work, then [the Bureau of Economic Analysis] reduce[s] their output calculations accordingly. We made an early estimate right at the beginning of the crisis that was a little bit lower than the estimate you just cited, and have been studying hard as this has gone on, and have found that actually the damage is a little bit worse because of government contractors—something that was excluded from our first analysis.
This slip-up is a significant one: About 3.7 million people work for companies that do business with the federal government, and as in any business, when a very important client stops paying its bills, companies find ways to stop paying their people, too. The nonprofit Good Jobs Nation estimates that one million contract workers are currently unemployed because of the shutdown. A New York Times analysis found that the 800,000 affected full-time government employees lose an astonishing $200 million in compensation for each day that it persists; according to Bloomberg the same is true for contractors, too.
While "government contracts" may conjure up images of well-compensated Boeing engineers building next-generation jet fighters, procurement makes up only about one-fifth of federal contract dollars, according to the Washington Post; the provision of services accounts for the remaining four-fifths, much of which are administrative in nature. Custodial staffers, security guards, and cafeteria employees, for example, typically work for agencies under contracts with private-sector employers, and according to Good Jobs Nation, one-third of the one million out-of-work contractors make less than $15 an hour. When the nation's office buildings, museums, and other facilities are locked, the people who keep them clean, safe, and running smoothly have nowhere to go.
Companies are weathering this period of uncertainty by encouraging their personnel to take vacation time, shuffling them off to training courses, and finding other creative ways to prevent them from sitting on their hands, says the Post. But while larger entities with significant client rosters and multimillion-dollar contracts are equipped to survive a public-sector downturn, those that depend more heavily on steady federal dollars are also feeling the squeeze of stop-work orders. The CEO of a 160-person firm told the Wall Street Journal that he's exhausted his corporate line of credit and may have to lay off workers at the end of the month, hoping to re-hire them when (or if) this 27-days-and-counting debacle comes to a close.
The past few weeks have been a nightmare for the estimated 800,000 full-time employees who won't receive paychecks for as long as President Trump holds the government hostage. But "essential" personnel who are working for free right now, at airports and food processing facilities and the U.S.-Mexico border, are guaranteed to receive backpay as soon as the government re-opens. Congress passed a bill this week that will do the same for furloughed workers, too. Delayed money is of little use to those whose rent payments and utility bills are due now, but at least they know that eventually, they'll be made whole again.
Contractors have no analogous protections; if they don't work, they don't get paid. A bill introduced by Minnesota senator Tina Smith would provide for backpay for low-wage contract employees, requiring agencies to pay what they would have paid had the shutdown never occurred in the first place. Congress has never done something like this after previous shutdowns, though, so its chances of passage are at best, murky. For these people, the safest course of action is to treat this time as money they'll never see.
Unlike federal employees, contract workers have no guarantees that they'll have jobs to which to return, either. And even those who do may not be able to return to work the next day, since according to one executive, it may take weeks for furloughed full-time employees to give contractors the go-ahead to move forward on currently-suspended contracts. The shutdown's consequences, in other words, could reverberate long after it ends, which means that if Donald Trump doesn't know how important these people are to the health of the American economy, he's going to find out soon enough.
