Shutdown Woes Deepen As 800,000 Federal Workers To Miss Second Paycheck; IRS Employees Bail

This article was originally published by Tyler Durden at Zero Hedge

With negotiations behind the partial government shutdown showing no signs of a breakthrough, an estimated 800,000 government employees are set to miss a second paycheck on Friday.

Roughly 420,000 federal employees are working without pay, while around 380,000 have been furloughed amid the longest shutdown in US history, according to CNBC.

While the actual economic impacts are thus far thought to be limited, specific companies and industries are feeling the effects.

Commercial airlines, for example, are facing slower demand as airports struggle with understaffed security checkpoints, are losing revenue. Last week, Delta said it had lost $25 million in revenue on account of the shutdown.

The hit to the overall gross domestic product in the first quarter is also difficult to quantify. Economists have come up with a range of numbers, but they agree that the longer the shutdown goes on, the wider the damage to economic growth. –CNBC

Hundreds of IRS employees, meanwhile, will probably skip work as part of a coordinated protest which takes advantage of a provision which allows them to stay home if they suffer a “hardship,” according to the Washington Post. With IRS offices headed into their busiest time of the year, the the shutdown may result in delayed refunds and frustrating wait times, despite President Trump’s promise not to delay payments.

“I have fielded no less than 30 to 40 calls, emails or text messages about hardship requests from employees daily since Thursday,” said Shannon Ellis, President of the National Treasury Employees Union.

The Trump administration last week ordered at least 30,000 IRS workers back to their offices, where they have been working to process refunds without pay. It was one of the biggest steps the government has taken to mitigate the shutdown’s impact on Americans’ lives.

But IRS employees across the country — some in coordinated protest, others out of financial necessity — won’t be clocking in, according to Tony Reardon, president of the National Treasury Employees Union, and several local union officials. The work action is widespread and includes employees from a processing center in Ogden, Utah, to the Brookhaven campus on New York’s Long Island. –Washington Post

Prospects for reopening the government were grim on Tuesday after President Trump’s latest proposal to end the impasse (which outraged immigration hard-liners), was immediately rejected by Democrats. His plan, which includes funding for most public agencies, promises to DACA recipients, and of course – funding for his wall, is headed for a vote this week in the Senate where it is anticipated to fail.

Trump maintains that he won’t sign any bill that does not fund the long-promised border wall.

Stretched workers are struggling

According to University of Michigan economist Michael Gelman and four colleagues, many furloughed federal workers will be forced to delay paying the mortgage or credit card payments.

The study looked at the effects of the 2013 government shutdown on nearly 7,000 federal workers – both those affected by the shutdown and not – along with more than 90,000 non-federal workers.

The researchers found that the median worker in the study had only enough cash or other liquid assets to cover just eight days of their average household spending. That cushion fell to just five days of spending just before payday. The bottom third of the group had, on average, a combined checking and savings account balance of zero on the day before their paycheck arrived. –CNBC

“Even if there are penalties or costs, late payment of a mortgage is a source of credit that is available without the burden of applying for credit,” write the authors.

For the most part, effected federal workers didn’t use credit cards to make up for their lost wages in 2013 – they simply postponed payments on outstanding debt. That said, the 2013 shutdown only lasted two weeks, while workers in the current shutdown will miss their second pay cycle – forcing many who have missed credit payments to face late fees.

Furloughed IRS tax examiner Will Kohler of Covington, Kentucky has run into an entirely different type of problem during the shutdown; his application for unemployment benefits is in limbo because the Treasury Department responsible for verifying his claim is closed thanks to the shutdown.

Kohler, who makes $38,000 a year, said many co-workers are in the same predicament. Not a single one has been approved for unemployment, he said. Kohler said workers like him are stuck in a difficult position, in part because they are restricted by government ethics rules from getting many kinds of outside work. –CNBC

“When it gets to a point where government employees have to go to a food bank, this is not the America that I grew up in,” said Kohler. “It’s mind-boggling. It really is.”

This article has been contributed by SHTF Plan. Visit www.SHTFplan.com for alternative news, commentary and preparedness info.