Jan 23, 2019 - 4:30pm

Shutdown Strains Businesses Across the Country


Senior Editor, Digital Content

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A sign announcing the closure of the National Archives due to a partial government shutdown is displayed in Washington, D.C.
A sign announcing the closure of the National Archives due to a partial government shutdown is displayed in Washington, D.C.

The partial government shutdown has passed the one-month mark.

While leaders in Washington struggle to reopen the government, workers and businesses bear the brunt.

The shutdown reminds us that the federal government is an important institution for America’s free enterprise system.

“The simple reality is individuals and businesses depend in many ways on the federal government to facilitate commerce,” wrote J.D. Foster, U.S. Chamber Senior Vice President, Economic Policy Division, and Chief Economist. “Government often requires permits of various types before a business is allowed to undertake an activity. Many of the permit granting agencies have gone dark for lack of funding, which means some commercial activities are delayed or cancelled altogether.”

Necessary work isn’t being done, workers and companies aren’t getting paid, and business opportunities are lost as a result.

Last week, the U.S. Chamber, along with more than 300 business groups, asked leaders in Washington to find a compromise that will “restore the full operation of the federal government.” Not doing do “is causing significant and in some cases lasting damage to families, businesses, and the economy as a whole.”

Here are just a few industries being hurt because of the partial shutdown.

Travel

The shutdown has meant slower and longer lines through security for some air travelers. But for airlines it has meant lost customers as government workers who would normally travel by air aren’t, CNBC reports:

The partial U.S. government shutdown will cost Delta Air Lines about $25 million in revenue this month as fewer government contractors and employees are traveling, [Delta’s] CEO Ed Bastian, said Tuesday.

It has also meant an inability to offer more flights to customers. Southwest Airlines’ new service to Hawaii will likely be delayed, and Alaska Airlines is postponing opening service from a new airport outside of Seattle.

Hotels are feeling the pinch too, Stephanie Linnartz, the Marriott International’s global chief commercial officer, told Yahoo Finance:

[The shutdown] is impacting our business, and Washington, D.C., is just one example. We have 150 hotels and they’re seeing a decline in business, double digits, as a result of this.

Restaurants

If government workers aren’t going to the office, they aren’t going out to get lunch, which is hurting restaurants near federal buildings, like this one in Phoenix, AZ:

It's been a few weeks now since the start of the new year, but not all of Denise Bismore's customers have returned from their holiday vacations. The manager and owner of three SpoonZ Cafe locations in downtown Phoenix is missing her regular customers — the Monday-through-Friday crowd of business professionals, many of them federal employees, stopping by for a salad or sandwich on their lunch break.

"I hadn't really thought about it, because we were in holiday mode and were on Christmas break," Bismore says, "but I definitely have noticed I haven't gotten all of my people back."

One of the SpoonZ locations is at the U.S. Bank Center on First Avenue and Adams Street, right across the street from the U.S. Attorney's Office. Staff there haven't been at work since the partial government shutdown began on December 22. The state's U.S. Department of Housing and Urban Development and the Bureau of Land Management downtown offices have also been shuttered, their employees now staying at home.

"Eighty percent of my business is regulars, repeat business, so I've definitely felt the impact," Bismore says.

Craft brewers

For craft brewers, success often revolves around constantly churning out new kinds of beer to satisfy curious palettes. That’s why many of them are growing increasingly frustrated with the shutdown.

In order for a brewer to sell a new beer, the can or label design must be approved by the Bureau of Alcohol, Tobacco, and Firearms (ATF).

Jason Roeper, owner and brewmaster of Riverton Brewery in Monroe, OH, is one of those waiting on an approval:

“I’ve got a big investment just sitting there that I can’t get a label approval for,” Roeper told Cox Media Group Ohio. “We had submitted everything before the shutdown happened and there’s a wait period.”

Government contractors

There has been much written about the 800,000 federal employees furloughed. But there are also the contractors that perform work for the federal government. Companies like HSG, LLC, aren’t getting paid and are feeling the strain:

When the partial government shutdown began, Mark Patton, the chief operating officer of HSG LLC, wasn’t too worried. But 25 days later, the longest government shutdown in U.S. history has all but cut off revenue to the 160-employee federal contracting firm, pitching it into crisis.

Nearly all of the federal agencies that HSG works with, including NASA and the Department of Interior, are closed because of the funding lapse, forcing Mr. Patton to stop paying many of the company’s employees. The firm has exhausted its line of credit and Mr. Patton and other executives have started to give their salary back to the company to maintain a meager cash flow. If the company can’t cover their employee health-care plan at the end of the month, HSG may have to formally lay off many of its workers and try to rehire them after the shutdown ends.

“I’m out of cash. I don’t know how to continue to support these employees. We are not a large company by any means,” he said. “It’s a hellacious situation to be in.”

The longer the shutdown continues, the more needless pain will be inflicted. It will require compromise on all sides, but leaders in Washington must come to the table and find a solution that reopens the federal government.

It’s time to remove this weight dragging down too many workers and businesses.

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About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.