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Shutdown Means Workers Furloughed as Death Benefits Halted

Oct. 2 (Bloomberg) -- The partial shutdown of the U.S. government shows no signs of ending quickly, as lawmakers stiffen their positions and seek to shift blame to the other side. Peter Cook reports on Bloomberg Television's "In The Loop." (Source: Bloomberg)

Michelle Young took her usual 25-minute bus ride yesterday morning to be notified that her secretarial job at the U.S. Census Bureau didn’t exist anymore.

When she arrived at the agency’s concrete headquarters in suburban Maryland with son Daveon, 2, in tow, she signed paperwork related to her furlough. And with that, her $700-a-week paycheck was gone until lawmakers on Capitol Hill end the political standoff over the U.S. government’s budget.

“They need to come to an agreement,” said Young, 39, as her co-workers filed out of the building into an uncertain future. “The smaller people are paying for their disagreement. It’s not just them it’s affecting.”

As the first partial federal shutdown in 17 years closed government facilities from coast to coast, workers such as Young were among the first to feel the pain. About 800,000 workers were furloughed yesterday, after employees came briefly into work to post “closed” signs on office doors, secure their files and update voice-mail messages.

The disruption came as House Republicans refused to pass a budget that doesn’t roll back parts of President Barack Obama’s Affordable Care Act, the health care overhaul they have voted more than 40 times to repeal in whole or in part. The furloughs are adding to the financial pain for some federal workers, who haven’t seen a raise because of a federal pay freeze enacted three years ago.

Photographer: Julia Schmalz/Bloomberg

A sign explains that only exempted employees could remain at work at the Federal Trade Commission in Washington D.C. Close

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Photographer: Julia Schmalz/Bloomberg

A sign explains that only exempted employees could remain at work at the Federal Trade Commission in Washington D.C.

‘Political Pawns’

At some agencies, almost everyone was let go, according to planning documents filed with the White House. At the Bureau of Labor Statistics, which compiles the closely watched monthly employment report, just 3 of its 2,409 workers were set to stay through the shutdown. The Federal Election Commission exempted only its four commissioners. The Census Bureau, where Young is employed, planned to have 35 of its 15,641 employees working.

“We’re sick and tired of them using federal government employees as political pawns,” said Cesar Anchiraico, 37, a statistician with the agency, who said he set aside enough money to get through 14 days without his $2,500 bi-weekly paycheck. “We’re the casualties. They don’t care. They still get their paychecks.”

Those lost wages will begin a ripple effect through the U.S. economy, costing at least $300 million a day in lost output, according to IHS Inc. (IHS), a forecasting company. While that’s a fraction of the country’s $16.7 trillion economy, the effects may grow over time as consumers and businesses defer purchases and abandon expansion plans.

Around Capital

The slowdown may be most visible in the region around the nation’s capital, which was buoyed over the past decade by an increase in government spending.

Virginia GovernorBob McDonnell, a Republican, estimated that one-third of the state’s 172,000 federal civilian workers could be furloughed. Washington, D.C. is dipping into reserves to keep municipal employees on the job, including teachers, because the city’s budget is dependent on the passage of a federal one.

“Unless somebody takes me out in handcuffs, I’m not shutting anything down,” Vincent Gray, Washington’s Democratic mayor, said Sept. 28.

Uncertainty

Maryland Governor Martin O’Malley’s office said yesterday that federal wages pump about $25 billion a year into the state, which would lose about $51 million in tax revenue if the federal government goes through a two-week disruption.

“In a fragile economic recovery like the one we are going through, these manufactured crisis don’t help us at all,” said Daraius Irani, director of Towson University’s Regional Economic and Studies Institute outside Baltimore. “It just creates an environment of uncertainty, and no one likes uncertainty.”

Jeremy Phillips, who works on education statistics for the Census, said that uncertainty has been a way of life during his four-year government career, as Congress lurched toward one budget crisis after another. It’s taught him a lesson: He’s been saving money in anticipation of the next manufactured crisis.

“It’s not as bad as it was two years ago, when I didn’t have any money saved,” Phillips, 27, said as he headed back home. “I’ll be fine.”

While about 400,000 civilian workers at the Defense Department will lose their jobs for an indefinite period, uniformed military personnel will continue to be paid, thanks to legislation passed by Congress and signed by President Barack Obama on Sept. 30 within an hour of the government running out of money.

Aid Frozen

Troops may be affected in other ways. The Navy said funding for tuition assistance won’t be available for sailors taking any classes that begin after Oct. 1. While basic pay will continue, no new bonus agreements or special hardship duty payments can be awarded until after the shutdown, the service said on its website.

The Pentagon said that while military funerals at Arlington National Cemetery can proceed, death benefits won’t be paid immediately for troops who die during the shutdown, according to a briefing last week by Pentagon Comptroller Robert Hale.

As she waited for her bus home yesterday, Young said she stayed up until 10:45 p.m. the previous evening, watching local news reports on the shutdown.

She lives with her aunt in Capitol Heights, Maryland, a Washington suburb, and doesn’t have to worry about how the rent will be paid. Still, it’s made her start to reconsider her career with the federal government.

“They say it’s a steady paycheck and there’s security in the job,” she said. “But I am starting to think differently about it. If they can do this now, they can probably let us go whenever they feel like it.”

To contact the reporter on this story: William Selway in Washington at wselway@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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