Issue Briefs

Following is the portion of an OMB report on the impact of the partial government shutdown last month focusing on the direct effect on federal employees and on the programs they administer.


The recent shutdown jeopardized both the income stability of hundreds of thousands of Federal employees and their ability to focus on important agency missions that citizens rely upon each day.

During the shutdown, hundreds of thousands of Federal employees did not receive their full paychecks, including many employees that were legally required to work during the lapse. While all Federal employees ultimately have been compensated for the period of the shutdown, the burden of delayed paychecks on Federal workers and their families was significant and harmful.

Furloughs during the shutdown also followed an unprecedented three-year pay freeze for Federal employees, and, for hundreds of thousands of workers, administrative furloughs earlier this year caused by sequestration. The shutdown disrupted agency operations in many ways and has been challenging to recover from.

Federal Employee Furloughs

The largest direct cost of the Federal government shutdown – both to the Federal budget and to the economy – was work not performed by Federal employees during the 16-day period. Federal employees were furloughed for a combined total of 6.6 million work days, with furloughs affecting workers at the vast majority of agencies. Although the October 2013 shutdown was shorter than the 21-day shutdown that took place in December 1995

– January 1996, the total number of employee furlough days was larger, even if one ad¬justs for growth in the size of the Federal workforce. This is largely because seven appro¬priations bills were enacted before the start of the December 1995 – January 1996 shut¬down, so several major agencies were able to operate normally during that period of time. By contrast, as of October 1, 2013, no agencies had received full Fiscal Year 2014 annual appropriations.

One way to quantify the cost of furloughs is in terms of the amount the Federal govern¬ment had to pay for work not performed. We estimate that the total cost of pay due to federal employees furloughed during the shutdown is roughly $2.0 billion; total compen¬sation costs are about 30 percent larger (about $2.5 billion). This exceeds the compara¬ble payroll costs of $430 million (about $650 million in todays’ dollars) for the Novem¬ber 1995 shutdown and $630 million (about $1 billion in today’s dollars) for the Decem¬ber 1995 – January 1996 shutdown.

Overall, Federal agencies furloughed roughly 850,000 employees per day in the immediate aftermath of the lapse in appropriations, or roughly 40 percent of the entire civilian Federal work-force. Those employees that were not furloughed were retained either because they were performing activities that are “excepted” under the applicable legal requirements (such as activities necessary to maintain the safety of life or the protection of property), or because funding remained available to pay their salaries and expenses during the lapse from sources other than annual appropriations.

Because circumstances evolved over the course of the shutdown, there were instances in which agencies modified the number of employees on furlough, both recalling employees and furloughing additional employees. Most notably, after Congress passed and the Pres¬ident signed the Pay Our Military Act, the Department of Defense recalled the majority of the roughly 400,000 civilian employees that were furloughed for the first week of the lapse. (The Pay Our Military Act provided appropriations for the pay and allowances of those civilian personnel that that the Secretary of Defense determined provide support to members of the Armed Forces.)

Changes at other agencies over the course of the shutdown were smaller in magnitude and went in both directions. For example, during the second week of the shutdown, the Social Security Administration recalled over 8,000 workers to process claims appeals and conduct other critical work necessary to ensure the timely payment of benefits. In addi¬tion, some employees who were initially working were subsequently furloughed. For in¬stance, over 7,800 employees at the Veterans’ Benefits Administration that were working for the first week of the shutdown were furloughed following the exhaustion of remaining carryover balances from the previous fiscal year. The Federal Emergency Management Agency (FEMA) recalled a select number of employees to prepare for Tropical Storm Karen, but the agency subsequently placed these employees back on furlough after the storm dissipated. These changes to the number of furloughed employees reflect the dy¬namic nature of the shutdown, as agencies responded to changing circumstances over the two and a half weeks.

Impacts on Programs and Services

Another way to quantify the costs of Federal employee furloughs is by examining the shutdown’s impact on programs and services. The shutdown impacted millions of Ameri¬cans, due to furloughs of Federal employees, reduced services for the public, and delays in payments to Federal grantees, States, localities, contractors, and individuals. Employ¬ees not on the job could not conduct many food, product, and workplace safety inspec¬tions, prepare for flu season or monitor other public health issues, or provide numerous other services important to the general public and the economy. Meanwhile, many grant¬ees and contractors not receiving Federal payments during the shutdown furloughed their own employees and delayed or terminated services. The shutdown also affected direct services for veterans, seniors, and other vulnerable groups; public health and basic re¬search; product safety and environmental protection; worker rights and safety; interna¬tional trade and relations; and other basic government services.

Direct Services for Veterans, Seniors, and Other Vulnerable Groups

• Stalled weekly progress in reducing the veterans’ disability claims backlog, which had previously been progressing at a rate of almost 20,000 claims per week. In the six months before the shutdown, the Department of Veterans Affairs (VA) reduced the disability claims backlog by about 30 percent, and, in the week before the shutdown, VA processed enough applications to reduce the backlog by about 18,000 claims. In contrast, during the two- and a half weeks of the shut¬down, the backlog remained roughly flat (at about 418,000 claims).

• Halted or curtailed important veterans’ services.Services that help veterans understand their benefits – including the education call center, hotlines, and all regional offices outreach activities – were closed to the public during the shut¬down, and many veterans lost access to vocational rehabilitation and education counseling services.

• Delayed access for 1,400 military service members to workshops designed to help them transition to civilian life and employment. The shutdown forced the postponement of some Transition Assistance Program (TAP) workshops, which help transitioning military service members find civilian jobs and access benefits.

40 TAP employment workshops were cancelled and had to be rescheduled, which delayed transition support to 1,400 service members.

• Temporarily closed six Head Start grantees, serving nearly 6,300 children. Head start grantees operating in Alabama, Connecticut, Florida, Georgia, Mis¬sissippi, and South Carolina closed for up to nine days before reopening with funds provided by philanthropists through the National Head Start Association or their state.

• Delayed home loan decisions for 8,000 low-income working families in rural communities. The Department of Agriculture’s single-family loan guarantee pro¬gram was unable to process loan applications during the shutdown, preventing el¬igible families from receiving loans.

• Kept home more than 600 young people who had committed a year of their lives to serve local communities through AmeriCorps.AmeriCorps National Civilian Community Corps is a residential program that engages 18- to 24-year¬olds in national service, including responding to natural and other disasters such as floods, fires, and tornadoes. More than 600 Corps members who were prepared to begin their service the week of October 6 were told to stay home.

Public Health and Research

• Cut back flu season surveillance and monitoring, as well as other public health monitoring. CDC cut back its annual flu vaccination campaign for a peri¬od of time and suspended its weekly “Flu View” report, leaving local public health authorities without access to complete national flu season data for two weeks. CDC staff also discontinued analysis of surveillance and molecular epi¬demiologic data to identify clusters of linked Hepatitis and Tuberculosis cases that cross State or local jurisdictional boundaries.

• Put on hold most Federal government support for new basic research, due to furloughs of 98 percent of NSF employees, nearly three quarters of the NIH, and two thirds of the CDC. For example, no new NSF grants or grant continua¬tions were issued during the shutdown; on average, NSF issues about 765 grants and continuations in a two-week period.

• Furloughed four out of five Nobel Prize-winning researchers currently em¬ployed by the Federal government. Three of the Laureates who were furloughed work at NIST, performing cutting edge research in physics that could have broad commercial applicability in areas such as advanced communications, cyber secu¬rity, and computing. The fourth furloughed Laureate works at NASA on the new, much more capable, successor to the Hubble Space Telescope. Across agencies, many of the Federal researchers who may contribute to the next Nobel Prize¬winning discovery in science or medicine were furloughed, with their work de¬layed or disrupted.

• Prevented the enrollment of patients in NIH Clinical Center studies. Alt¬hough the hospital remained open for patients already enrolled in studies, NIH could not enroll new patients into current studies or start new studies during the shutdown, except for patients with life-threatening or urgent medical problems. During the shutdown, NIH admitted 25 patients, who had a life threatening or ur¬gent medical problem, but seven clinical protocols that were scheduled to begin during the period of the shutdown were delayed.

• Forced the transition of the NSF’s U.S. Antarctic Program (USAP) into care¬taker status, resulting in the cancellation of some research activities for the entire 2013-2014 season. The NSF is responsible for maintaining the United States’ presence in the Antarctic, including an active research program and logis¬tical support for that research. With available funds exhausted after two weeks of the shutdown, NSF began placing USAP research stations, ships and other assets into caretaker status, including redeploying scientific and contracted operations personnel. Caretaker status for the research stations entails minimum human oc¬cupancy to ensure protection of government property and safeguarding of human lives. The stations could not be completely shut down because extreme environ¬mental conditions would quickly destroy them. When the government reopened, NSF worked to restore normal operations, but some research and operational ac¬tivities will have to be cancelled altogether this year. For example, NASA and NSF had to cancel their Antarctic-launched long-duration space science research missions for the year because NSF cannot reopen facilities in time to get research balloons off on schedule. The balloons are used as a platform for space science research into phenomenon such as cosmic rays and the Big Bang.

• Prevented access to state of the art instruments at NIST that researchers from the private sector and academia rely on. For example, access was denied to the NIST Center for Neutron Research (NCNR), impacting researchers from academia and industry who had scheduled experiments months in advance. Ap¬proximately 70 experiments scheduled at the NCNR months in advance could not be performed. The financial loss due to lost beamtime was approximately $2 mil¬lion.

• Stopped the National Radio Astronomy Observatory’s operations at its facili¬ties in Charlottesville, VA, Greenbank, WV, and Socorro, New Mexico, as well as 10 Very Long Baseline Array sites across the United States. During the shutdown, no new observations were made at these facilities, jeopardizing on¬going projects, especially research requiring continuous data. Approximately 500 hours of observing time was lost at Green Bank Observatory; almost half of which was high frequency observing time that is seasonal and cannot be resched¬uled. Over 600 hours of observing time were lost at the Very Large Array and Very Long Baseline Array. In addition, observatories ceased support for approx¬imately 2,700 users who were processing existing data or planning new observa¬tions. This affected a range of projects that detect radio waves emitted by astro¬nomical objects and also advance state-of-the-art signal processing. The loss of time and user support will affect not only researchers, but also undergraduate pro¬jects, graduate students seeking data for their thesis projects, and public and school groups whose visits were cancelled.

Product Safety and Environmental Protection

• Sharply curtailed routine FDA inspections of domestic and international food facilities, delaying nearly 500 food and feed domestic inspections and roughly 355 food safety inspections performed by States under contract.

While the agency continued to conduct “for cause” inspections where there was an imminent threat to health or life, nearly 500 food and feed domestic inspections and roughly 355 state inspections that are normally performed during this period each year did not occur during the shutdown. These routine inspections enable FDA to determine compliance with the law and ensure that unsanitary conditions and practices which may result in foodborne illness are addressed. The FDA also cut back on examination, sampling, and laboratory analysis of imported products during the shutdown.

• Discontinued FDA oversight of certain non-food products and left consumer questions unanswered. During the shutdown, the FDA discontinued almost all activities related to the regulation of cosmetics, review of information from manu¬facturers of medical products (including allergenic extracts, whole blood, and blood components for transfusion), and many user-fee supported human and ani¬mal drug, device, or biological product applications. The FDA was also unable to answer routine consumer questions regarding food safety, medical devices, blood products and vaccines, and veterinary products.

• Prevented the timely and full investigation of 59 airplane accidents by the NTSB. With the large majority of its workforce furloughed, the NTSB was only able to launch investigations into two aviation accidents during the shutdown, put¬ting it behind schedule for these and other ongoing investigations. The NTSB was also forced to reschedule two important public investigative hearings.

• Halted the EPA’s non-emergency inspections at about 1200 hazardous waste facilities, chemical facilities, and drinking water systems; discontinued evalu¬ations of potential health impacts of new industrial chemicals; and stopped reviews of pesticides for adverse impacts to health and the environment. While the majority of these inspections will be rescheduled, they are unlikely to fully be made up during this fiscal year.

• Stopped Consumer Product Safety Commission (CPSC) work related to re¬calls of products that could cause injuries. CPSC was only able to continue work related to products that present an imminent threat to consumer safety, and therefore normal work related to recalls was halted. CPSC’s port inspectors were furloughed, preventing the agency from screening thousands of products, includ¬ing children’s merchandise that could contain excessive lead and sleepwear that may violate flammability standards.

• Prevented the USGS from gathering and processing data on natural disas¬ters. The USGS lost an opportunity to gather information on damage caused by the Colorado floods, including landslides, debris flows, and other activities. The loss of these data significantly reduces the ability of scientists and disaster re¬sponse professionals to learn from these extreme events. The shutdown also im¬pacted the capacity of the USGS to deliver information to states on potential pol¬lution caused by record flooding in the South Platte River Basin.

Worker Rights and Safety

• Suspended almost 1,400 Federal inspections to prevent workplace fatalities and injuries, which will not be fully made up. The Occupational Safety and Health Administration (OSHA) protects the safety and health of the nation’s workers, in part by conducting workplace inspections in high-hazard industries. During the lapse in appropriations, OSHA could only respond to workplace fatali¬ties, catastrophes and imminent danger situations when there was a high risk of death or serious physical harm. OSHA opened only 283 total inspections during the shutdown – just 16 percent of the number it opened during same time period last year – and put approximately 1,370 inspections on hold.

• Denied assistance to almost 500 small businesses across the country seeking to keep their workplaces safe. The government shutdown impacted OSHA’s Consultation Program, through which States provide free on-site safety and health assistance to small businesses. One-third of Consultation Programs stopped doing employer visits during the shutdown, impacting almost 500 small businesses.

• Stopped nearly all investigations to enforce minimum wage, overtime, child labor bans, and other workplace protections. The Wage and Hour Division (WHD) at the Department of Labor is responsible for enforcing a variety of laws that establish minimum standards for wages and working conditions. In a typical week, WHD concludes more than 600 investigations and compliance actions. However, during the shutdown, WHD was only able to respond to incidents in¬volving imminent serious injury or death of a child or farmworker; as a result, it opened only one new investigation during the two and a half week shutdown and put more than 6,000 ongoing investigations on hold. Over the course of the shut¬down, because Wage and Hour investigators were unable to perform their jobs, back wage payments of approximately $8.8 million for an estimated 12,100 workers went uncollected.

• Delayed ongoing investigation activities surrounding recent workplace safety or casualty events. Chemical Safety Board investigators were furloughed, halting their analysis of the West, Texas fertilizer plant explosion from April during the shutdown period.

• Denied a venue for legal relief to thousands of workers experiencing discrim¬ination. The Equal Employment Opportunity Commission (EEOC) is the primary agency charged with the enforcement of Federal employment discrimination laws. Americans who believe they have experienced discrimination in the workplace must first file charges with the EEOC and await a response before they can file suit in Federal court, and so timely disposition of these charges is critical to EEOC’s mission. During the shutdown, EEOC received nearly 3,150 charges of employment discrimination that it was unable to investigate, creating a backlog that it will take about one month to work through.

International Trade and Relations

• Furloughed nearly all of the Treasury Department’s Office of Foreign Asset Control (OFAC), which implements the U.S. government’s financial sanc¬tions against countries such as Iran and Syria. With only a very small share of employees excepted, the office was unable to fully sustain many of its core func¬tions of: (1) issuing new sanctions designations against those enabling the gov¬ernments of Iran and Syria as well as terrorist organizations, Weapons of Mass Destruction proliferators, narcotics cartels, and transnational organized crime groups; (2) investigating and penalizing sanctions violations; (3) issuing licenses to authorize humanitarian and other important activities that might otherwise be barred by sanctions; and (4) issuing new sanctions prohibitions and guidance. The majority of staff at Treasury Department’s Office of Terrorist Financing and Fi¬nancial Crimes, Office of Intelligence and Analysis, and Financial Crimes En¬forcement Network were also furloughed.

• Cancelled travel by the President and other Administration officials that would have advanced U.S. trade goals and promoted job creation. The Presi¬dent was forced to cancel a trip to the Asia-Pacific Economic Cooperation (APEC), a trip that could have been a key step in negotiating the Trans-Pacific Partnership regional trade agreement that will link the United States to economies throughout the Asia-Pacific region. U.S. Trade Representative Michael Froman had to postpone a round of negotiations in Brussels on the Transatlantic Trade and Investment Partnership, a trade and investment agreement being negotiated be¬tween the European Union and the United States. These trade agreements are crit¬ical to opening up markets for U.S. businesses to export goods and services abroad and create jobs at home.

Other Basic Government Services

• Delayed tax filing assistance and almost $4 billion in refunds to taxpayers.

While continuing to file returns and making estimated payments during the shut¬down, taxpayers could not receive assistance from IRS walk-in sites or telephone services, and taxpayer correspondence went unaddressed. Meanwhile, roughly $3.7 billion in refunds (including $2.2 billion in refunds to individuals and $1.5 billion in refunds to businesses) were delayed.

• Delayed the start of the 2014 tax filing season up to two weeks. With most IRS operations halted during the shutdown, the IRS could not engage in normal com¬puter programming and testing in preparation for the 2014 tax filing season. As a result, some taxpayers who file early and are entitled to refunds may have their re¬funds delayed for up to two weeks due to the delay of the start of the originally planned 2014 tax filing season.

• Suspended the issuance of Social Security cards and closed down the E-Verify system for employers to check worker eligibility. On a typical day, ap¬proximately 60,000 Americans apply for Social Security cards, which they may need to be able to start a job, take out a loan, open a bank account, or conduct other financial transactions. During the shutdown, SSA could not issue new So¬cial Security cards. Employers were also unable to access the E-Verify system to check prospective employees’ immigration status.