Thursday, April 7, 2011

An Expensive Way to Save Money

So, the impending government shutdown is taking all the headlines.  And so it should.

But not for the "one-liners" and political jabs that it's used for.  Or for the catchy news program with shock-music to go along with a neat graphic to display on the tube.

You see, I think the real story of the government shutdown is how expensive it's going to be.  That's right.  I think it's going to cost more to shut down than it would to keep it going.

First, unemployment.  Reported here, in the event of a government shutdown, federal employees who are furloughed due to the shutdown may collect unemployment insurance.  That's 800,000 people.  Let's just say that the typical payment per week is $400 for unemployment.  That's $320,000,000 per week.  Just for relativity's sake, a monthly unemployment check for all government employees would be $1.2 billion dollars.  On top of this, while some might not term government employment high-value employment (thinking of Doc Henderson), it is of some value.  That value is lost for the public at large.

According to the Bureau of Labor, there are about 2 million civilian employees, excluding the Postal Service.  That's a weekly $800 million and a $3.2 billion unemployment paycheck, respectively.  Makes the 800,000 seem conservative.

Second, the work doesn't stop.  While the workers might, the work continues to accrue.  So, either one of two things happen (or maybe both).  Either the work never gets done due to a lack of time, or the work accrued during the shutdown has to be accomplished during overtime.  If this is the case, then the public will actually pay more for the same work and get nothing better in return.  Awesome.

Third, the federal government is the Nation's largest employer.  How do you think spending habits will change?  Assume you lost your job.  Would you spend the same or would you live on as little as possible?  My guess is that, being the Nation's largest employer, the shutdown will have a negative impact on an already fragile economy.  The shorter the shutdown the better, but if this goes long, I think we're in trouble.

To give Doc Henderson his due, there might be some benefit to the shutdown.  If some of those government employees see the government as an unstable employer (just live in fantasy land for just a moment), then they might leave government service and find work elsewhere in a higher-value job.  Thus, society is better off.

But don't count on it.


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