Who Is Affected by a Government Shutdown?

Martinns / iStock/Getty Images

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

A government shutdown might seem unsettling, especially for federal employees who wonder how it might affect their jobs. The average person might also wonder how it affects their daily lives and what could be changing about it.

What exactly is a government shutdown and how does it happen? Here’s a breakdown on all the details so you know what to expect the next time you hear news about a possible government shutdown.

What Is a Government Shutdown?

A government shutdown occurs when no funding is available to continue operating government services. This can happen when a spending bill fails to pass, and there is a deadlock in Congress around the bill.

What Stops During a Government Shutdown?

When spending bills don’t pass, the government can’t allocate money toward several government agencies. Some of the functions that may stop include:

• National parks may be unavailable for services.
• IRS processing may be delayed.
• Passport applications may be put on hold.

If national services are paused, many workers may be furloughed until Congress and the president can pass a bill.

Essential employees and agencies do continue work, as some jobs cannot be shut down, such as:

• Air traffic control
• Law enforcement
• Medical workers
• U.S. Postal Service

The government can shut down completely or experience a “partial shutdown.”

What Happens in a Full Shutdown?

In a full shutdown, no government functions are funded, and all non-postal government employees do not receive a paycheck.

What Happens in Partial Government Shutdown?

More common are partial government shutdowns, which impact select government employees due to a spending bill that affects those jobs.

Federal Employees Hit First

When there is a government shutdown, the first to feel the impact are federal employees. If a federal employee works for an impacted agency or program, they are immediately furloughed when the shutdown occurs.

What Is a Furlough?

A furlough is a mandatory, temporary unpaid leave for federal workers. They remain employed, but aren’t allowed to work and can’t be paid until the government shutdown has ended.

Workers are various federal agencies and programs may be furloughed, including office workers, National Park rangers and grounds management.

What Are Essential Employees?

Often referred to as “essential employees,” these workers are usually in sectors such as:

• Public safety
• Medical care
• National security
• Energy management

Essential employees are still required to be on the job — even when the government shuts down.

Are Government Employees Paid During a Shutdown?

All government employees do receive back pay when the spending bill is finally passed, but it can get stressful when no money is coming in. In general, the government won’t foot interest, fees or late payment penalties caused by a government shutdown.

How a Shutdown Affects Government Contractors

In general, government contractors may need to suspend work activities during a shutdown and will not receive paychecks during this time.

While there is clear guidance on how furloughed federal workers are handled — including back pay — government contractors are not usually addressed in government shutdowns.

Government contractors are not usually awarded back pay, either, making it tough for contract workers if there is an extended shutdown. Positions like janitorial services, IT workers and cafeteria workers are furloughed without pay until the shutdown has ended.

Government contractors may also see delays in getting contracts approved — and those with currency contracts may not get paid until the government reopens. In addition, locations that house a high percentage of federal workers may also see a decline in business if there’s a prolonged government shutdown.

Services for the Public May Be Delayed or Disrupted

While federal workers and government contractors are directly impacted by a government shutdown — there are more indirect impacts to the entire nation. Many public services can be interrupted during a government shutdown, such as:

• Passport and visa processing
• National park visitor’s centers
• Federal museums
• Access to other federally-controlled lands

U.S. citizens can also expect delays when interacting with federal agencies such as the IRS, Medicare and Social Security offices. This can cause delays in customer support which can impact your tax refund or Social Security payments.

Federal Assistance Programs Are Placed at Risk

There are several federal assistance and welfare programs that may also be at risk during a government shutdown, such as:

• Food stamps (SNAP)
• WIC
• Housing vouchers

These programs may experience delays, including delayed grant funding and benefits distribution.

This can have a huge impact on low-income families that rely on these services for the basic necessities of life.

Local Economies and Small Businesses Also Suffer

In addition to the impact on public services, local economies and small businesses may be impacted as well. With less visitors to federally-managed tourist spots like National Parks, local businesses may see less foot traffic and lose business revenue. 

Military and Veterans

While the military is considered “essential” and active duty military personnel are still required to work, paychecks might be delayed during a government shutdown. Military veterans who rely on payments and benefits offered by the Office of Veterans Affairs (VA) might see delays in benefits or support services offered.

VA hospitals are considered essential and do stay open, but hospital staff pay not see a paycheck until the government officially re-opens.

Air Travel and Transportation Can Be Impacted

While the Transportation Security Administration (TSA) and air traffic controllers are considered essential, many are required to work without pay during a shutdown. This could have some impacts on air travel, such as increased delays at security and flight delays.

In addition, federal highway projects would come to a halt, causing delays in construction projects and potential traffic headaches for commuters and truckers.

Did You Know?

According to data from the Committee for a Responsible Federal Budget (CRFB), there have been 20 “funding gaps” since the modern budget process was introduced in 1976. But there have truly only been four government shutdowns that have affected government operations for more than one day, including the 34-day partial shutdown from Dec 21, 2018 to Jan 25, 2019.

What You Can Do If You’re Affected

If you find yourself furloughed from your job due to a government shutdown, know that you will receive back pay — even if you don’t work.

Let Creditors Know

Since bills are still due, you should immediately contact your creditors, including mortgage lender, utilities, loans or credit cards and let them know your situation.

Negotiate a delayed payment with them and let them know you can pay as soon as the government re-opens.

Have an Emergency Fund

You may still need access to funding quickly for necessities like food and transportation, so it’s always a good idea to keep at least one month of expenses in a savings account as an emergency fund.

Find Assistance Programs

If you don’t have any spare cash, it may be worth reaching out to your local credit union — if you bank there — to see if they have any special assistance programs for furloughed employees.

The key is to take steps to prepare now so that you aren’t caught off guard if a government shutdown happens in the future.

Share This Article: