As the partial government shutdown drags on, federal contractors are living without paychecks. Further, they face the prospect of receiving no back pay when the stalemate ends, Sunny Blaylock opined in USA Today.
David J. Berteau is president and CEO of the Professional Services Council, a trade group that represents federal contractors. On Jan. 8, he wrote an open letter to President Trump, noting "hundreds of thousands of employees support the government through contracts" and deserve pay for their labor.
On Jan. 11, Del. Eleanor Holmes Norton (D-D.C.), reintroduced House legislation, the Low-Wage Federal Contractor Employee Back Pay Act of 2019. The bill would guarantee paychecks for contract service workers.
On Jan. 16, unpaid federal contract workers rallied at the Washington, D.C., office of Senate Majority Leader Mitch McConnell (R-Ky.). One protester, Smithsonian contract employee Faye Smith, has applied for food stamps and unemployment insurance in Maryland, according to Government Executive. "My rent is due, and I’m in the Second Chance [rent credit program], so if I’m late I’ll be evicted," she said.
That same day, Sen. Tina Smith (D-Minn.) introduced legislation, S-162, to provide back pay to low-wage contractor employees such as Faye Smith. The bill has 22 co-sponsors, 21 of whom are Democrats.
What are the broader economic impacts of 4 million unpaid federal contractors reeling from a political deadlock between President Trump and Congressional Democrats over federal funding of a U.S.-Mexico border wall? In brief, the impacts of 4million uncompensated contractors and 800,000 federal employees without paychecks are real.
One needs no Ph.D. in economics to see why. Consumer spending accounts for 70 percent of the U.S. economy.
Increasingly, analysts fret over the shutdown cutting gross domestic product (GDP), or economic growth, as household spending drops due to the lost buying power of 4.8 million unpaid federal contractors and employees. Predictions are that first-quarter GDP, depending on the length of the federal shutdown, will decline from 0.6 to 1.5 percent.
But wait. The Bureau of Economic Analysis, which collects GDP data, is closed. Why? The BEA is part of the U.S. Commerce Department, which lacks federal funding to operate fully under the shutdown.
The partial government shutdown has also cut funding for the Census Bureau that collects jobs data from households for the widely watched employment situation report the Bureau of Labor Statistics issues at the beginning of every month.
However, the BLS, which collects jobs data from businesses for the monthly jobs report, is funding the Census Bureau to collect the household jobs numbers. What does all this mean? The January employment situation report will be complete and released according to schedule.
The Government Contractors Association, Inc. and National Association of Government Contractors did not respond to a request for comment on this story.
What is next? The shutdown approaches the one-month mark with no end in sight. President Trump and Congressional Democrats seem further apart than ever.
Meanwhile, the current lack of compensation for federal contract employees is personally devastating to them, while the broader impacts will be negative to GDP. The only question is how negative, economically speaking, since data-collection for national GDP is suspended. This is spurring uncertainty, a bane to businesses big and small.
