Do you have $7,000 sitting around? $10,000? $15,000? If not, then maybe you can empathize with the panic furloughed federal workers are starting to feel.
Data firm Sentier Research estimates that among the 800,000 federal workers not receiving paychecks, the average amount of lost pay in the fifth week of the government shutdown is $7,035. Average annual pay for those workers is around $73,200. So foregone wages add up to nearly 10% of annual income.
I looked at my own accounts and estimated how I’d fare if I suddenly lost 10% of my income. I’d get by, but it would be uncomfortable, and without a doubt, I’d stop buying everything except essentials. I’d also start making plans for liquidating investments and making sure I had cash on hand if the toll rose to 20% or 30% of my pay. And I consider myself lucky, since my kids are now adults, and I’ve been saving for years and building home equity. Many aren’t as fortunate.
President Trump and Congressional Democrats continue to trade barbs over who’s to blame for the shutdown, while progress toward a solution remains elusive. Trump’s disapproval rating has hit an all-time high of 57% in a Politico/Morning Consult poll, with 54% blaming Trump and Republicans for the shutdown, and 35% blaming Democrats. Suspended federal funding now jeopardizes airline safety, FBI investigations, judicial proceedings and scientific research, among other things.
Amid reports that some federal workers are hitting up food banks to fill the fridge, Commerce Secretary Wilbur Ross said on CNBC, “I don’t really quite understand why.” He pointed out that furloughed workers will get back pay, once the shuttered agencies are funded again. He urged federal workers running short of cash to get a loan from a bank or credit union, even if they’ll have to pay interest on the money out-of-pocket.
Sentier Research estimates that 74% of the 800,000 furloughed workers own a home, and about 82% of those have a monthly mortgage payment, which averages $1,600. For the 26% of furloughed workers who rent, the average monthly rent is $1,440. Credit unions offer short-term loans to qualified borrowers at interest rates of around 6%, so if you borrowed $5,000 to cover the rent or mortgage, and paid it back after three months, it would only cost you around $75. For $10,000, it would cost $150, and for $15,000 it would cost $225. Pocket change! Just make sure to avoid late fees and other penalties for nonpayment of bills.
If you’re a contractor linked with one of the unfunded agencies, you’re less lucky, because lost revenue is not likely to replaced. You simply have to make do with a shrunken top line and hope to survive. The Washington Post estimates there are nearly 10,000 contractors losing $200 million a week on account of the shutdown, which would mean about $1 billion in lost revenue so far. Eh. That’s just a rounding error compared with overall GDP.
On the whole, lost pay for furloughed workers totals $6 billion so far, and rising, topping the $5.7 billion in border wall funding Trump is demanding as his ransom for reopening the government. That’s $6 billion federal workers don’t have to spend today. But the good news is, they’ll have it to spend tomorrow. As long as they make it to tomorrow.
Confidential tip line: rickjnewman@yahoo.com. Click here to get Rick’s stories by email.
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Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman
