An Unnatural Disaster: Never Again

The U.S. economy’s losses in the five-week government shutdown are estimated to be at least $6 billion, which nears the original cost to clean up the Exxon Valdez oil spill. And like that other unnatural disaster 30 years ago, the longest shutdown in American history will no doubt have consequences that last for decades. In other words, it’s not over till it’s over. That’s why our friends and neighbors affected by the shutdown will need significant help to recover.

Even if the government somehow remains open beyond the February 15 deadline to strike a new deal, the financial and emotional damage to America’s dedicated public servants, their families, and their communities is substantial. Not only were 800,000 federal employees furloughed or forced to work without pay, thousands of government contractors and their employees were affected by lost income.

At the very least, this “hit from within” has generated uncertainty and decreased economic confidence in the affected communities. At worst, it could be a tipping point for vulnerable, hard-working people living paycheck to paycheck. Even though furloughed public servants will receive back pay, it will take time before the money that is owed to them is deposited in their bank accounts. Some federal employees who were forced to work without pay are running out of savings, and others are living on loans. And as money runs out, food banks gear up for a surge in demand as millions of people search for ways to make ends meet. Ironically, in California food banks turn every $1 donated into 5 pounds of food, so if the $6 billion dollars had been donated to food banks instead of the shutdown, it would have generated 30 billion pounds of food; enough to feed more than 20 million people for an entire year or eliminate all child food insecurity across the country for the same period.

As for contractors and their families: A Washington Post analysis found that nearly 10,000 companies had active contracts with the federal government at some point during the shutdown. More than 6,000 of those are considered small businesses. Their shutdown stories run the gamut from lost employee health-care benefits to near-bankruptcy as they struggle to come to terms with the unforeseen losses of income.

And what about the long-term desirability of public service? There is no doubt that the toll of the shutdown has some federal employees and contractors questioning the security of their jobs or projects. If we continue to use public servants and contractors as hostages in shutdowns, we risk a devastating brain drain and loss of institutional memory as the best and brightest in the most essential services stay away from government jobs. Think of TSA and FAA agents who keep our skies safe, USDA food inspectors who keep us healthy, and NASA researchers who tackle the huge challenges of landing humans on Mars and reversing climate change.

These effects will only be exacerbated as public servants retire and we face the challenge of replacing them. Prior to the shutdown, 14% of federal employees were eligible to retire, according to the Office of Personnel Management. In the next five years, that number is expected to jump to 30%. A Politico analysis finds that the federal workforce is older than it has ever been and that younger workers aren’t entering. Today, just 17% of federal workers are under 35 years old, compared with nearly 40% in the private sector. More than a quarter of federal employees are now older than 55.

What we do today — right now — will make a huge difference to companies and citizens affected by the shutdown and the spreading ripples of fear and uncertainty. Our next steps will matter a great deal. Do we cut and run, leaving them to dig out of this human and economic crisis on their own? Or do we stand shoulder-to-shoulder with our neighbors to help them recover from this unfair and undeserved predicament?

The combined responses from banks, credit unions, lessors, and even payday lenders will constitute a defining moment in this crisis. Unless these organizations consider the shutdown’s long-tail financial hardships, many people could be forced into severe cash-flow crises or, in some cases, poverty.

Throughout this crisis, as during past calamities, neighbors have come together to support one another and strengthen one another. Let’s hope America’s neighbors will continue to step up and help. As we focus on urgent temporary relief, we must also explore and understand the long-term economic and social implications of the shutdown.

John F. Kennedy’s famous words, “Ask not what your country can do for you, ask what you can do for your country,” inspired a nation to see the importance of civic action and public service. The importance of these words has never resonated more than today. As we consider post-disaster clean-up efforts, we must carefully assess the implications of the devaluation of public service by federal employees and contractors and put in place a forward-thinking resiliency plan to reinvigorate the allure of public service.

Senior Partner Emeritus @mckinsey, @hmbbrewingco, @pstaproom, @fusecorps, @newamerica, @movecafwd views are my own-do or do not, there is no try

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