What a government shutdown could mean for the Wisconsin economy

Published: Sep. 28, 2023 at 10:48 PM CDT
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WAUSAU, Wis. (WSAW) - As the looming threat of a government shutdown persists, millions of individuals could find themselves abruptly without income, a situation that not only impacts federal employees but also poses serious economic risks for the entire nation.

“If an urban or suburban workforce, a good percentage of it simply stops working and they don’t have income, then they’re not spending money. And so that has a distribution effect on local businesses, and so on and so forth. So it can hit a local economy hard,” John Blakeman, a Political Science Professor at UW Stevens Point, said.

In the event of a government shutdown, federal employees fall into one of two categories. They are either considered essential and expected to continue working without immediate pay, or they are considered non-essential and are not required to work, but they also receive no pay or firm promise of when they will resume work and receive income.

While essential employees are expected to work without pay temporarily, the government will eventually reimburse them which makes the process legal said Robert Gray, an Attorney at Gray Law Firm, S.C., said. However, this means there could be consequences.

“...to expect someone to perform at their peak and know that there isn’t a benefit at the end. I think people are going to be surprised. Services are going to be slower, services will be not available [during the shutdown],” Gray said.

The U.S. Office of Personnel Management estimates that there are approximately 14,045 federal civilian employees in Wisconsin. However, the consequences of a government shutdown extend beyond federal employees. Programs and employees deemed non-essential would also cease operation, affecting citizens who rely on them.

“Social Security folks, veterans benefits, food benefits, food pantries, all those workers are, to us, essential. But if they’re not getting paid, how can they keep their households going?” Gray said.

Central Wisconsin would likely be somewhat sheltered from the impact of a government shutdown but other parts could see more impacts said Blakeman.

“The impact will be relatively minor, [because] the Federal workforce in the Wausau area is less than 1% of the total workforce. Same in Stevens Point and over in Wood County. A handful of federal employees in central Wisconsin might be furloughed, but it really will have a minimal impact on the overall economy. There are some counties like Iron County up on the Michigan-Wisconsin border, where about 5% of the area workforce is federal. That might see more of an impact,” he said.

Blakeman believes that political pressure, particularly with an upcoming election next year, will likely lead to a quicker resolution if a shutdown occurs compared to previous shutdowns. He states, “I think Congress will actually do the right thing and fund the government fairly quickly. But it’s economically painful for those employees who are temporarily let go.”

The ongoing struggle surrounding government funding has led experts to question the entire process and call for change.

“This isn’t how we should be doing the budgetary process,” Blakeman said.