'A Sense Of Uncertainty'—The Local Economy And The Shutdown

Jan 24, 2019

As the partial government shutdown continues, it's clear that communities and individuals across the country are being affected. That includes southern Colorado and Colorado Springs. Dr. Tatiana Bailey, director of the UCCS Economic Forum, came to 91.5 KRCC to discuss the local implications of the shutdown both now and in the long-term.

Highlights from the conversation:

On where she sees the shutdown having the biggest effect locally:

It's a little difficult to say exactly how many individuals we're talking about [being affected], but we have the national numbers and we even have some sense of the state numbers. The thing that is a little bit difficult to measure are the number of contract workers and we do know that Colorado in particular is sort of a hotspot for federal contractors.

Dr. Tatiana Bailey is the director of the UCCS Economic Forum. Bailey has her Master's in economics and her doctorate in public health, both from the University of Michigan.
Credit Courtesy Photo / University of Colorado, Colorado Springs

On why federal contractors have the potential to be hardest hit by the shutdown:

We're talking roughly about four million contract workers. How many are in each state? That's is a little difficult to say because that data is not necessarily the same over the course of a year, but four million is pretty significant when you think about it. Especially when you think they're not going to receive backpay or are less likely to receive backpay. Colorado is a hotspot for contractors just like any area that has a strong federal presence. The state of Colorado in particular has a lot of Department of Defense. Now, DoD is not necessarily impacted, but components of certain departments and agencies are being impacted.

On how much has been lost in wages so far since the shutdown began:

The most recent estimates that I've seen are approximately 200 million in lost wages per week. Now, if you break that down to how much in wages for the average federal employee first paycheck that they lost is about 5000 dollars on average. And now looking at the full impact over the course of a month we're now going to be hitting up towards 10000 on average. You know, the average American family cannot sustain that.

On the emotional effects of the shutdown for people receiving government assistance:

Given that it's the longest shutdown in U.S. history, … something that I think is key [is] the uncertainty of it. And you think about people who are receiving benefits, if they had a sense that it's going to be resolved next week, then that would take out some of that uncertainty. What happens when individuals feel that there is a lot of uncertainty? They start to bolster their savings and they start to cut down on discretionary spending.