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A Shutdown Would Have More Negative Effects than You Might Think

The budget impasse threatens our future capacity to govern.

Reasonable people have concerns about how a partial shutdown would affect some of the basic functions of government. But it’s not just current capacities that would be affected—a shutdown threatens our future capacity to govern as well.

The fallout from a shutdown could substantially impact the long-term ability to retain, recruit, and manage the career civil service and contracted employees that comprise our national government. In many ways, a shutdown (however temporary) could be an inflection point to the state of a civil service that seems to be holding on for presidential turnover in 2020.

In past shutdowns, small stopgap measures have been introduced in the waning days before a deadline to ensure immediate back pay for employees. For this particular Congress, such credible commitments to the civil service are still likely. What’s more, guidance to agencies from the White House Office of Management and Budget to use “carry-forward funding” and “transfer authority” to stem the damage of a temporary appropriations lapse is still in effect. Yet, despite experience from past shutdowns and contingency plans from both the Obama administration and the current administration, some agencies remain inadequately prepared for another shutdown, just as they were in 2013. This relative lack of preparation stems from leadership vacancies and an inattention to competent management by the current administration. Combine this with yet another shutdown threat, and the state of the civil service is potentially dire.

An examination of the organizations (and people) whose contributions provide the country’s defense, consumer protection, social security, scientific research, fundamental economic indicators, infrastructure and more shows that morale is down across most agencies. When government shutdowns occur, agencies have to make critical choices that can severely degrade the credibility of these institutions as viable career choices for our best and brightest. For current employees, these choices have both tangible and psychological costs.

Vulnerability Inside and Outside Government

Among the more salient concerns are the financial considerations for federal employees. Many federal employees (like many Americans) are living paycheck to paycheck. Even if they are eventually paid for the time that government is shut down, it creates a short-term financial strain that can do long-term damage. A continued shutdown without a regular paycheck can force employees without a financial cushion to pay bills late, thus impacting credit scores. As Michael Gelman and colleagues found from the 2013 shutdown, many federal employees had low liquid assets. To subsidize the brief two-week shock, fed employees used multiple sources of short-term liquidity to smooth consumption, including delayed payments for mortgages and credit card balances. Our own work, through both survey analysis and interviews with career staff, shows that when stability—as one of the primary attractions to government service—is undermined, the potential for decreased retention and an inability to recruit talent increases with such disruptions.

The impacts could be more devastating for contractors, who by some estimations outnumber federal employees by a two-to-one ratio, bringing the federal government’s blended non-military workforce to approximately 6 million. Most Americans are unaware that contractors are often working every day in government offices, doing the same work as career civil servants. Indeed, a consistent finding in both political science and public administration research is the general lack of understanding about public bureaucracies, the programs they deliver, and how they perform. As agencies have been pushed to reduce their permanent full-time employees, they increasingly rely on contractors. When there is a shutdown, contractors working under certain types of contracts do not receive pay for the time that government is shutdown. If government shutdowns are a regular occurrence,  pragmatic contractors need to increase prices to protect themselves from unreliable government payments.  

More under-the-radar impacts of shutdowns relate to the less tangible incentives of government work. For instance, agency executives must choose a few employees who are deemed “essential” to continue work through a shutdown, while their “non-essential” peers are banned from working—including accessing their work computers and emails. This division causes friction within work groups, as managers must choose between employees. Some employees are insulted that their work is less valued than that of their peers, others are frustrated that they are asked to work when others are not, and some are concerned about team members who financially cannot afford a skipped paycheck.  

Creating distinctions between “essential” and “non-essential” work may also have longer-term implications for employee motivation. For people who regularly work 10-hour days (often without compensation for the extra hours) to be told they are “non-essential,” undermines morale and raises questions about whether their work is valued. Employees subjected to such signaling might lessen their commitment and willingness to sacrifice their personal time. In a recent experimental study, we found that only the most mission-oriented employees are likely to persist in the face of undue working conditions. Nobel laureate George Akerlof and Rachel Kranton’s work on “identity economics,” as well, portends to the importance of organizational identity as a subsidy to diminished material incentives. Given the reorientation of some agencies’ missions under the current administration and proposed pay freezes, it’s reasonable to question how much more even highly motivated employees can take.

With more than half of career senior executives currently eligible for retirement, unprecedented numbers may leave under the conditions created in this political environment. Evidence from recent public management research indicates that there is a “contagion effect” in turnover intentions within agencies. The talent necessary to replace these employees may be increasingly discouraged from careers in government, as those with post-graduate or professional degrees are paid substantially less than their private sector counterparts. Exiting employees, in turn, will take with them an experiential base, leadership background, and institutional memory and skills that will not be replaced by unilateral appointments. Moreover, with appointee vacancies widespread, it may very well be the career leadership on whom the majority of federal agencies must rely. The question is exactly where will we find them?

William G. Resh is an Associate Professor of Governance, Management, and the Policy Process at the University of Southern California’s Sol Price School of Public Policy. His recent book, Rethinking the Administrative Presidency (Johns Hopkins University Press), is available on Amazon.

Susannah Bruns Ali is an Assistant Professor at Florida International University. She previously worked as a Policy Analyst at the Office of the Assistant Secretary for Planning and Evaluation in the U.S. Department of Health and Human Services.

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