Shutdown another difficult moment for Georgia's nearly 111,000 federal workers

Caption

Travellers wait to go through security at the Hartsfield-Jackson Atlanta Airport in Atlanta, Tuesday, Nov. 22, 2022.

Credit: AP Photo/Brynn Anderson

The U.S. was plunged into its first government shutdown in nearly seven years today.

Hundreds of thousands of federal workers are furloughed and sent home without pay until Congress resumes funding.

The Georgia Department of Labor says there are about 111,000 federal workers in the state.

For them, the shutdown marks another difficult moment in a difficult year of downsizing and administrative upheaval.

GPB's Orlando Montoya spoke about the shutdown's potential economic effects with Ray Hill, associate professor of finance at Emory University's Goizueta School of Business.

Ray Hill: In the past, this has been a political event, not an economic event, all right? So we've had shutdowns, people missed maybe one paycheck. It was there — eventually those paychecks were made up, maybe two, but not much more than that. And so the economic consequences were quite small because politicians seem to be aware that this could be devastating and somebody caves pretty early on. If I'm looking at this situation, the thing that strikes me the most about it is that we have a president who seems to be very comfortable with economic uncertainty, and he's already trying to reduce the federal workforce. So we're in a situation where at least we have one side that is gonna be, as far as I can see, a lot — I'm straying into politics now, but a lot more resolute than in the past. And so to my mind, this has a potential for going on for quite some time. If we get to be more than a month, a couple of months down the road and 2.25 million federal employees are not getting paid and some contractors are not being paid, well, then this is a very serious effect on the economy, given the scale of those expenditures.

Orlando Montoya: Consumer confidence: could this rattle not only consumers, but also businesses? This is coming on top of tariffs. This is coming on top of all the chaos that's been going on. Could this further introduce more uncertainty and lack of confidence in our basic system of economy?

Ray Hill: The most recent surveys show declining consumer confidence already, before we even get into this. And so, sure, I wouldn't even say it's declining confidence. If I've got a couple of million people who don't have paychecks, whether they're confident or not, they're not gonna be spending the money. So the ripple effect is going to be — if it lasts, if it lasts — is going be quite severe. If we follow the historical norms and somebody caves within the next couple of weeks, then I think we'll look back and see it as a political show and we won't worry about it, but that may not happen this time.

Orlando Montoya: I've gotten a question from one of my colleagues about economic reports. Because apparently, the Bureau of Labor Statistics and maybe USDA, the government issues so many reports. But if these reports aren't coming, could that also have an effect on the economy?

Ray Hill: Normally I'd say yes — again, caution that if it goes on. Nobody is gonna miss two weeks of government reports, OK? I don't think they will. Somebody will, some economist trying to do research is. But the rest of the world is not gonna miss that. If we get into, again, beyond a month, then it becomes more serious. The curious thing to me is that Wall Street doesn't seem to have any reaction to this at all. If you look at the market, it's doing quite well and went up yesterday. And you would think that it's precisely Wall Street who would be the most deterred by having not access to reports on how the economy is doing. But for some reason, the Wall Street doesn't seem to mind that. I don't know — I don't know why.

Orlando Montoya: Let's go to another impact that could happen and that is airports and travel. The last shutdown we had was really ended by TSA because all those TSA workers didn't show up for work and then travel started getting chaos. Can you talk about the effects on that?

Ray Hill: TSA workers are usually deemed essential. So they're required to come to work even though they don't get paid. But at some point, TSA workers say, "well, I'm gonna go work somewhere else." Or "I'm not gonna show up for work" and it's hard to make people do that. So I think again, that's one of the couple of weeks down the pike, a month down the pike effect that we might see. I have a really nice trip I've been planning for a year at the end of the month. I am paying close attention to it. And it's exactly about the time when you might see the cracks begin to appear in trying to keep essential workers there. And then you'd have to —really have a disruption in air travel. But again, I think that's a month away if it happens.