Coming to a Town Near You: Economic Blowback from the Shutdown

empty wallet

It's day two of the government shutdown, and there's no end in sight (although enough House Republicans have publicly defected that if Speaker Boehner allowed a clean bill to be voted on, we now know it would pass). Parks are still closed, museums are still shuttered, the NIH is still not enrolling new patients in its cancer studies, and NASA is still off line. And, in a city near you, the economic troubles are just beginning.

Not surprisingly, the media's focus has largely been on Washington, D.C. After all, in addition to being the seat of the federal government, that's where the Panda Cam used to transmit cuteness worldwide, where a couple of Republican congressmen helped World War II vets to break into the national WWII memorial, and where staffers of the White House and Congress -- the people who really keep the government running -- are officially off the clock.

%VIRTUAL-article-sponsoredlinks%But Washington isn't the only place that's feeling the effects of the shutdown -- in fact, by some measures, it's not even feeling them the most. The Washington Post's business section recently compiled a map of the top metropolitan areas when it comes to federal employees. While D.C. had the largest number -- 446,000 -- it actually ran a surprising fourth when it came to percentage of workers who were employed by the federal government.

Colorado Springs, Colo., topped the list: Although it has a comparatively meager 55,000 federal employees, they represent 18.8 percent of its workforce. About 17.2 percent of Virginia Beach's workers draw a government paycheck, as do 17.2 percent of Honolulu's. By comparison, D.C.'s 14.3 percent federal employment seems almost unremarkable.

In some ways, this may sound like hair-splitting. After all, there is little question that the budget showdown is having a brutal impact on the nation's capital: According to one estimate, the current crisis is costing the metropolitan area $200 million every day. Still, it's worth noting that the economic effects of the furlough will be widely shared: According to a JPMorgan estimate, the shutdown is reducing nationwide income by $1.3 billion per week. Add in the multiplier effect of all that lost income, and it's clear that nobody is getting out of this crisis unscathed.*

That having been said, however, it's worth noting that the government is a major employer around the country. And, while military personnel and other "essential" employees are going to stay on the clock, all those "non-essential" workers who push papers and film pandas aren't going to be drawing paychecks. Which means, fairly soon, they'll stop spending those paychecks at the local McDonald's or Bed Bath and Beyond. For that matter, all the people who were counting on getting their veterans benefits started this month will likewise, not have money to spend. With the ripples of this shutdown just starting to spread, it's worth asking just how many degrees of separation there are between a federal employee's spending and your paycheck.

*Except, perhaps, for political analysts, who seem to be having a field day. For a few highlights of the shutdown parade, check out the Washington Post, where Steve Pearlstein is one of many analysts offering a little Monday-morning quarterbacking in his suggestion of how Democrats could fix the whole problem. Or, if you prefer, you could check out FoxNews, which is trying to rebrand the shutdown as a "slimdown." Or, alternately, there's Salon, which is trying to crowdsource a prediction on how long the shutdown will last. The current average prediction is 18 days, and the median is 14 days.

Bruce Watson is DailyFinance's Savings Editor. You can reach him by e-mail at, or follow him on Twitter at @bruce1971.