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I know that the government employees will be paid for their work during the shutdown after it has ended. However in the meantime they have to live on savings or on borrowed money.

Where I live (not the US) this would certainly be a huge problem for many of the employees, for they might not have the savings. On the other hand I know that the "personal finance management" in the US is much more debt-based, which could mean that there actually isn't a debate about people running out of money and they just continue using their creditcards like usual.

I am wondering if or if not people are becoming nervous and if there will be real problems for a significant amount of people because of this in the near future.

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    4 out of 5 workers in the US live paycheck to paycheck, so even assuming people working in government are more financially stable in general, I don't imagine many of them can afford to skip more then one paycheck. – Magisch Jan 10 at 9:15
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    "...if there will be real problems for a significant amount of people because of this in the near future." I think this can be taken for granted. US government shutdowns are a political element because of their dire implications. The stakes are high, that's why someone could use the regular shutdowns to advance his interests. It can backfire of course, or just produce losses to everyone in the process. – Trilarion Jan 10 at 9:20
  • I remember someone saying a while back that there are low/zero interest lenders for government workers during the shutdown where they can get the money they need and then pay back once they get their backpay. If that information is incorrect or wrong, a lot of them probably end up with higher interest loans that might follow them for years. – Morfildur Jan 10 at 10:13
  • There is no guarantee workers will be paid. It usually happens, but this administration is not usual. – Azor Ahai Jan 10 at 17:23
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    @Morfildur When I was a federal employee (some years ago, mind you), many banks would indeed offer those loans, but not to everyone. You still had to meet credit requirements, etc. So it helped those who were already in a slightly better position, but for those already worse off, it didn't matter because they couldn't get them at all. – Geobits Jan 10 at 19:21
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Short answer? It varies widely. High-paid or executive-level government employees can dig into savings or have good enough credit to take out a loan with only a small hit on their finances. But according to Forbes, 50% of government workers don't have a college degree, and 14% make less than $50,000. For them, this is (likely) the beginning of a debt spiral that will affect their housing and financial security, and given that many of the agencies that help the unemployed/poor are (ironically) shut down, that will make the impact even greater.

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Most states in the United States will recognize the furloughed workers as being "Unemployed" for the purposes of Unemployment benefits and will allow the furloughed employees to claim unemployment during this time. These payouts will normally satisfy their financial needs for the time.

Once the shut down is concluded and back-pay is awarded to the employees, the states usually expect to be compensated for the Unemployment benefits (I do not think there is interest expected by the state so this is a one to one reimbursement of the state, but you cannot keep both the unemployment money and the back pay). Additionally, many financial institutes are aware of the shut down and will ease up on the furloughed employees (especially if the institute was set up for banking with a particular agency, as most of their clients are in similar situations).

For point of refernce, the first date in which the check is not in the mail due to the shut down is today. The Federal Government has a two week pay period, and the check for the concluded pay period is sent out on the Thursday of the next pay period. So the furloughed employees did have their usual pay check during the first two weeks of the shut down (which started on the beginning of the last pay period, meaning they would be paid for it today).

  • That makes sense. Thank you! – Turysaz Jan 10 at 14:57
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    I think you're minimizing the effects here a little bit. I've heard far more about people whose mortgages, car notes, landlords, utilities, Internet providers, grocery stores, etc. aren't letting up. Unemployment benefits can take a long time to come in, and DC's is jammed right now, and many people probably didn't apply right away, perhaps expecting a few days of shutdown, not 3 weeks to a month. Two-federal employee households are doubly worse off. – Azor Ahai Jan 10 at 17:29
  • @AzorAhai: Often federal employees don't apply right away because few shut downs go to the third week (the historical record is 21 days) and the paperwork is quite bureaucratic and time consuming. Other employees do have a nest egg that they feel they don't need it. You will hear about the ones that worried all the time because both sides will use them as reasons to end the shut down by agreeing to their terms. Most federal employees view this as an unexpected vacation than anything else. – hszmv Jan 10 at 18:21
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    @hszmv That's what I said in my comment. I have not seen a single news article or Internet comment that suggests anyone is thinking of this as an "unexpected vacation" over an unnecessary financial stressor. Perhaps you could cite something that says that, including the lowest paid employees like TSA, not just the more highly paid civil servants. – Azor Ahai Jan 10 at 18:32
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    @Geobits: For the purposes of most umemployment laws, they do count as employed (It's a weird area, but the laws that cover this go by status as a government worker during the shut down... they don't ask if you are essential or not... just if you are federal employee during a shut down.). So they are included in this answer. There could be cases where a particular state does it differently, but I'm not aware of this distinction. I can say, as a DC area resident, I know a ton of federal workers and none of them are all that concerned when this happens. – hszmv Jan 10 at 18:54

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