Small businesses, employees count cost of US government shutdown

Thousands of small companies, their staff and contract workers stand to lose money that will never be recouped following 16-day shutdown

PUBLISHED : Friday, 18 October, 2013, 9:15pm
UPDATED : Saturday, 19 October, 2013, 9:19am

Gum Tong owns a diner in Washington and Matt Bellinger charters fishing boats in the Florida Everglades.

They have little except this in common: the shutdown of the US government cost them money they will never get back.

Pete's Diner & Carryout, a 50-year-old Capitol Hill eatery frequented by House Speaker John Boehner, lost about 80 per cent of its usual business, said Tong, surrounded by empty seats and Halloween decorations. Bellinger missed out on US$1,000 a day in cancelled charters because the Everglades National Park where he fishes was closed.

"What people have been doing in droves is saying 'We'll go to Disney World,' or 'We'll cancel our trip and go home'," Bellinger said. Nineteen groups dropped plans for four-hour fishing trips.

"I can't make that money back," he said. "It's gone."

The US economy is big and resilient. Now with the 16-day shutdown ended and the threat of a US default at least delayed, economists will probably look back on this as a glitch.

For people like Tong and Bellinger, and for thousands of small businesses, this was no glitch. It's money that can't be easily recovered, creating a long-term ripple effect - with the holidays approaching - that will be difficult to forget.

Standard & Poor's Ratings Services said the shutdown has shaved at least 0.6 per cent off of fourth-quarter GDP growth, or taken US$24 billion out of the economy. Analyst IHS reduced its fourth-quarter GDP growth estimate to 1.6 per cent, from 2.2 per cent in September.

Some small firms took immediate hits from the shutdown.

Tips dropped 25 per cent for servers at Vintage Pizzeria in Atlanta, near the Centres for Disease Control and Prevention. Century Cycles in Peninsula, Ohio, laid off two of its eight employees because it had to shut down the part of its business that rents bikes to tourists in surrounding Cuyahoga Valley National Park. In Washington, Carnivore BBQ food truck vendor Dion Kuehn told his only employee to stay at home.

"The girl is off work," he said. "I don't like people that work for me to be off work."

While the government sent home hundreds of thousands of employees, the agreement passed by Congress this week and signed by President Barack Obama includes back pay for the workers, who started returning on Thursday. It will not be the same for the additional thousands of contract workers or employees of companies that idled staff members when the US money slowed.

Federal agencies award more than US$500 billion in contracts a year, or about US$1.4 billion a day on average.

Janet Bashen and 18 of her 20 workers, including one part-time employee, had gone without pay at Houston-based government contractor Bashen Corporation. They were all due to go back on paid duty yesterday after her first federal payment since before the shutdown arrived, she said. "I was thrilled," Bashen said. "We're back in business."

The shutdown begat a kind of gallows humour among some. Six federal workers got together on the National Mall to hold a bake sale with treats such as "compromise cookies" and signs saying "Honk if U Want to Get Paid."

Beth Viola, a lobbyist at Holland & Knight whose clients include Dow Chemical Company and NextEra Energy said: "We should be lobbying our bosses for more vacation time."

Washington Mayor Vincent Gray said that 13,000 fewer hotel rooms were booked during the first week of October than last year and restaurant sales dropped about 8 per cent - even as residents are buying more alcohol. "People are trying to drown their sorrows," the mayor said.

Congress raised the debt limit only until Febuary 7 - and that worries Bellinger, the boat captain in Florida, because it's his high season.

"There's a potential for people to not call, thinking that they'll close the national parks again," he said. "If that happens in January, in February, the hit then would be devastating."