How Will a Government Shutdown Affect Workers?

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Our government is currently entrenched in a game of chicken, with both political parties staring each other down to see who blinks first. At stake is the passing of a spending bill, which is essential to keep our government running without interruption. If no agreement is reached by April 8th, then the government will not legally be able to pay workers. Unfortunately, neither side is willing to blink and we are getting closer and closer to a government shutdown.

What does a government shutdown mean?

The government will still function in a limited capacity. Basically, government workers will be broken into two groups – essential personnel and non-essential personnel. Essential personnel include people such as law enforcement, air traffic controllers, TSA, financial and securities officials, military members, and similar jobs. Essential personnel will still be required to report to work even if the government shuts down. Non-essential personnel would be furloughed until the spending bill is passed.

Who gets paid?

Unfortunately, if the spending bill isn’t passed the government won’t be authorized to give paychecks. All earnings through April 8th will be paid on the normal paycheck schedule, but earnings after April 8th will not be paid until the spending bill is passed. This means the military won’t get paid during a government shutdown.

What about back pay?

Essential personnel who report to work during the government shutdown will receive back pay for the time they worked during the shutdown. Non-essential personnel who do not report to work will not automatically receive back pay, though Congress has the power, but not obligation, to allow back pay to be issued to furloughed workers.

Which government operations will shut down?

All government workers are affected by this shutdown, and some estimates put the number of people who will potentially be furloughed at close to 800,000 workers. Some government agencies will shut down completely during the possible government lock down. Some of these organizations include national parks, museums, and monuments, the National Institute of Health, the FHA will not process mortgages, the Small Business Administration will not continue issuing loans to small businesses, and passports will not be processed.

The US Postal Service, Social Security, military retiree pay, GI Bill benefits, and many other government benefits will continue to be paid.

What can you do if you are affected by a government shut down?

Government jobs are generally considered the most secure of all, and for the most part they are. Layoffs are rare, the benefits are great, and the positions are usually very stable. In fact, we haven’t had a similar threat of a government shut down since 1996, when the government temporarily shut down during the Clinton Administration. The last two shut downs were brief and all government employees received back pay for the time they did not report to work. That said, there is no guarantee this time around (and there is no guarantee the government will even shut down). At this point it is wait and see.

The threat of government closure underscores the importance of having an emergency fund in place that you can tap into if you do not receive your scheduled paycheck, and it’s even more important if you become furloughed and don’t receive back pay for the time you don’t report to work.

If you don’t have an emergency fund in place, then you may need to consider using a credit card to help pay for expenses during a government shut down. The key is to try and pay them off as quickly as possible to avoid high interest rates. Some of the best military credit cards also have a 0% introductory rate on purchases, so you can use one of these cards to help bridge the gap in pay, then pay down the balance over time without incurring interest payments.

Right now we don’t have a lot of information, so the key is paying attention to the news and staying in touch with the head of your organization to learn the latest news as it develops.

About the author: Ryan Guina is a military veteran and the founder and editor of The Military Wallet, a personal finance blog focusing on helping military members, veterans, and their families improve their financial situations.

Published or Updated: April 7, 2011

Comments

  1. DR says:

    Ryan, thanks for the info on the government shutdown. I work in D.C. and was here during the 1995 shutdown. A lot of folks were really worried about their jobs, although in the end they all got paid for the lost time. What I remember most is that my commute into D.C. everyday was a breeze!

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