On Wednesday morning, hundreds of federal employees found themselves either working without pay or not working at all, as government funding expired overnight.
This shutdown highlights the ongoing failure of lawmakers to secure contracts that would keep federal agencies operational since January 2019. Notably, previous shutdowns during President Trump’s first term reached a record 35 days, marking the longest closure in U.S. history.
The Congressional Budget Office (CBO) has projected that this latest shutdown could result in an $11 billion hit to economic output over the next two quarters, a loss that includes $3 billion the economy may never recover. In a more recent report, the CBO estimated that about 750,000 employees could be affected by the shutdown, with their lost wages costing the economy around $400 million each day.
Historically, Congress has opted to approve retroactive pay for federal workers once agreements to reopen the government have been reached. However, following the shutdown from 2018 to 2019, Congress enacted the “2019 Government Employee Fair Treatment” law, which mandates back pay for federal employees, including civil servants in Washington, D.C., affected by shutdowns.
The law stipulates, “Employees must be compensated on the earliest possible date after the expiration ends, regardless of scheduled pay dates,” and allows employees to use leave if they are required to work during the funding lapse.
Yet, uncertainty looms over the future of federal workers. Last week, the White House encouraged Democrats through a memo from the Office of Management and Budget (OMB) to brace for significant layoffs in the event of expired discretionary funds starting October 1st.
While some federal employees may be temporarily sidelined during the shutdown, the memo indicated a broader intention from the Trump administration to permanently dismiss staff amid the crisis.
Throughout this week, the threat of layoffs from the White House has been reiterated, with Trump mentioning on Tuesday that “many” federal employees could lose their jobs, though specifics were lacking. The president suggested that during a shutdown, certain actions could lead to irreversible consequences for those workers. “Cutting out huge numbers of people—cutting what you like,” he stated in reference to the Democrats.
Meanwhile, Democratic leaders have downplayed the layoff threats, labeling them as tactics to coerce agreement on the House Pass “clean” funding bill. Nonetheless, some Democrats have quietly voiced concerns about the potential fallout of layoffs, realizing that trying to challenge such actions legally may not guarantee success.
