The Financial Impact of The Government Shutdown

Last Update: February 22, 2021 Scholarship

A financial impact is growing drastically due to a disaster beyond government institutions’ control. This follows significant effects already flowing through the economy, causing financial problems for millions of people who rely on the government to earn. Those who rely on paychecks will have difficulties. It’s the right of every employee to earn a paycheck.

Since the 24th day of the partial government shutdown, hundreds of thousands of federal workers (an estimated 800,000) have not yet received their first pay. Also, thousands of federal contractors are not in jobs and may, in one way or the other, fail to regain their non-received paychecks, as well as a significant effect on workers. According to the analysis, the federal workers missing their first pay reflect great different jobs and skills, where half of these workers do not have college degrees, and nearly 14% of the affected make only $50,000.

However, if a worker misses his paycheck, he can’t pay their mortgage, rent, credit cards, buy groceries, pay for a student loan, among other bills. Below are some of the discussed impacts of the government shutdown on federal workers.

Day to Day Living

Maybe you are wondering if day-to-day living matters in our life. Everyday life is normal! The estimated 800,000 federal workers who missed their first pay this month are directly and negatively affected in their living. Remember, most of them have to limit their budget, ignore impulse purchases, stop paying for services they don’t use and avoid other spending activities. As stated earlier, the impact may even get worse to 14% of those having no college education and end up making less than $50,000, thus unable to cater for their needs.

Paying Debt

It’s essential to clear all the debts on time to avoid inconveniences. Meaning, it doesn’t matter you are a federal worker receiving a paycheck or missing; you are expected to pay for any debt owing. Remember, most lenders and credit cards are still in progress, providing relief for the workers losing their paycheck. While working to assist, some workers are not yet satisfied. You wonder why? When they don’t receive their paycheck and miss a single debt, the potential consequences of defaulting on loans and credit cards may increase, ballooning into more deficits and credit card problems. Though, this depends on the creditor and loan type. It’s advisable to contact your creditor and request a temporary relief program during the shutdown to avoid inconveniences.

Loose Income

Federal workers are losing income since they are not receiving their paycheck, and the worst thing, they cannot predict when to get paid. However, those who work without missing their pay may lose their income since they don’t know when to get paid. For example, Washington DC has the hardest hit-restaurants, construction, cab drivers, and other local businesses, leading to more suffering.

Therefore, if you are a federal worker, why don’t you make a brave financial choice? It obvious, life is costly, and you need to plan your priorities carefully to reduce overuse. For instance, if you miss your paycheck and pay for a mortgage and nanny, you have to choose between the two. When you let your nanny go, you will get to save something.


Even after missing their pay, federal workers may get forced by the shutdown situation to get a loan. The cash may help settle their debts or pay for expenses and other bills. As said earlier, many creditors are trying to work with the borrowers (those in shutdowns) to reduce their rates and balances. Though this is happening, these borrowers have to clear their loans as stated by their lenders, thus a financial impact.

Dwindling Savings

It’s essential to evaluate your current situation. Therefore, you will have to make your savings a hassle, hardship, or even a downright pain in the butt to spend your money. By doing this, you will find you pay less of it and have extra savings or emergency fund. However, when the shutdown continues, the fund may not get enough to have one income source. For example, those with only retirement savings may require extra cash to take them through the shutdown, not forgetting the retirement savings’ financial hardship withdrawal options.

Mortgage and Home Expenses

As said earlier, a federal worker receiving a paycheck or not, have to pay for his or her debts on time. Also, most have a mortgage or home purchase since they have to pay for it. The estimate shows that over 39,000 mortgages may also get affected by the shutdown since many of these homeowners use FHA-insured loans, thus lowering the income. Remember, these housing problems are not limited to mortgage payments.

According to a recent HotPads Analysis, renters of these mortgages are also victims. The analysis found that about $189 million get paid by renters monthly, yet the housing problems are not limited when making these payments. The worst thing is, the Federal Housing Administration has limited operational staff, and there are possibilities of loan delays. These delays may lead to incomplete buyers’ purchases.

Assistance for Low-income Families

The most financially affected groups by the shutdown are the poor. However, if the problem will not get resolved soon, millions of Americans may also be the victims. Therefore, the government should provide the best assistant to these low-income families. All in all, financial regulators have requested financial institutions to work efficiently with consumers and sort out any upcoming issues that may affect their living as the shutdown continues. Some of the assisting program efforts to low-income families include;

  • Some creditors, such as mortgage companies and credit card companies, try to help. Therefore, if you are affected, you can contact any lender for a better solution.
  • Some of the credit unions worldwide, such as Justice Federal Credit Union, The US Employees Credit Union, FedChoice, and Navy Federal Credit Union, are working to provide assistance programs for families affected by the shutdown, especially those with low-income.
  • Also, companies such as T-Mobile, Verizon, Sprint, and AT&T are reducing fees by providing payment schedules to federal workers during the government shutdown.

Besides, the local and national banks are not left behind in providing customer relief. Some of them offer low rate loan programs, while others allow customers the certificate of deposits as early as possible. Therefore, if affected by the shutdown, it’s essential to check with your bank for assistance.

Food Assistance

Eligible low-income families and individuals’ food assistance is available and essential from the United States. However, the SNAP has to cut off or reduce if the government shutdown continues into March. Remember, the majorities get food assistance from the government though, this may be tricky since funding is assured to last by February.

Low-income Housing

The government shutdown has impacted many departments, as the Department of Housing and Urban Development (HUD) being among the most hit. More than 1,000 government-funded properties, house renters with low-income have expired. And if the shutdown continues, more could expire in the coming months. However, the expiry may lead to a real financial impact on low-income families at risk of eviction, causing delays of critical housing repairs.


The government’s substantial assistance in the world makes it more attractive to low-income federal employees. Though, this may be a challenge when the government shutdown continues. Remember, the lawmakers get another week of a shutdown without a resolution. As this process takes longer, the more the financial impacts will balloon a day after the other. For this reason, everyone is wondering what will happen next.



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