The Alexandria area could be in for an economic shock in just a few days.
About 400,000 people in the Washington, D.C. metro area work for the federal government, and thousands more are government contractors working for private companies and nonprofits.
A large percentage of those people may be furloughed at 12:01 a.m. Sunday, Oct. 1 — unless Congress is able to pass a new budget or a continuing resolution on the current budget. Due to political infighting, it's looking less and less likely that will happen.
One of the biggest direct effects will be on work and paychecks. Some government workers and federal contractors who are furloughed will not need to go to work — and won't be paid. Others will continue working without paychecks. The shutdown could also affect Social Security payments, veterans' benefits and more, effectively hitting the brakes on the local economy.
"I am definitely getting nervous," said Maria Elizabeth, owner of Salon deZEN in Old Town. "It was a big deal for a lot of our clients the last time that this happened and so many people were furloughed."
And, the timing couldn't be worse for thousands of residents, as federal student loan payments are set to resume in October. Thousands of people are about to get their first student loan bill in more than three years as the pandemic pause on payments ends.
Business Respond
During the last shutdown, several local businesses responded with kindness, including discounts for government employees and flexible payment plans for necessities. A number of local gyms offered free classes, and restaurants stepped up with free meals for furloughed feds.
"Our team is planning to respond the way we did last time with offering free haircuts or deferred payments to help out our community," Elizabeth said. "We also had a lot of clients that were not furloughed spreading kindness by offending to pay it forward by covering a cut/ color service for those that were furloughed. As unfortunate as it was to see the government shut down, it was beautiful to see how people came to help support the community as a whole."
For many residents, being furloughed means cutting back on any unnecessary spending. "I am worried about it because it always means less 'fun money' for folks to spend," said Old Town Books owner Ally Kirkpatrick. "On the flip side, our events tend to get better attendance."
Residents: How to Prepare
There is some good news: Government employees affected by the shutdown will receive back pay after the government reopens. However, many government contractors who work for private companies or nonprofits may not get back pay for their time off and face the risk of a permanent layoff.
Whether your paycheck may be delayed or cut starting Oct. 1, there are things you should do:
Cut back on your spending. It's a good idea to cut way back on your discretionary spending — that daily latte, new clothes, take-out food, movies and anything that's not absolutely necessary. If you have an emergency fund, you'll want that money to last as long as possible. (if you do get back pay, use it to replenish any emergency fund money that you had to spend.)
Transfer money to savings now. If you have extra money in your checking account, transfer it to a savings account for critical expenses such as rent or mortgage and utilities. Transferring that money can help you mentally prepare to spend as little as possible if and when a shutdown occurs.
Use your 'time off' productively. Some "side gigs" are prohibited, so be careful picking up a part-time job. Make sure that any freelance or gig work that you do is allowed by your primary employer. You may be able to use your sudden free time to go through those closets at home and sell things that you no longer need or use. Or, take time to work on that handmade-gifts hobby that can earn you some extra cash during the holiday season.
Make time for fun. Furloughs can be a bit depressing in addition to the financial stress. While spending as little money as possible, make plans to meet up with friends and take advantage of free activities. Having things to look forward to can help relieve some of the stress.
