Read: Many middle-class Americans are living paycheck-to-paycheck
Even for many of those workers not officially on federal salaries, the shutdown represented a squeeze. Federal contractors also went without pay, and it’s unclear whether they will receive back pay at all. Many of those contractors—for example, maintenance or custodial workers—are themselves members of the working poor.
And that’s not to mention the shutdown’s implications for those on federal assistance. On multiple fronts, the shutdown likely exacerbated ongoing struggles with income and wealth inequality. For poor and low-income people across the country, the shutdown meant real or threatened constrictions on housing and nutrition programs. The closures revealed that many housing authorities lack the reserves to survive any prolonged disruption of federal funds, and shrinking food support began to strain food banks and local grocers. The shutdown was especially difficult for people who depend on more than one federally subsidized program, including low-income contractors who may live in subsidized housing and qualify for food assistance.
The Trump administration didn’t seem to see these disruptions as serious or permanent, viewing any loss of economic activity as recoverable and any hardship among workers as easily remedied. As my colleague Annie Lowrey wrote last week, “In this telling, the shutdown is an economic event like a hurricane”: It might disrupt economic activity during the disaster, but afterward, economic indicators will quickly return to normal. But as the country has learned after multiple natural disasters over the past two years, crisis events can widen underlying structural inequalities, and can expose areas where systems lack long-term resilience.
Read: The shutdown deal is the same one Trump previously rejected
The shutdown, for example, exposed an ongoing savings crisis among public-sector workers, of whom two-thirds have liquid savings that amount to less than a month of income. The problem is unlikely to be fixed anytime soon. In August, Trump announced plans to cancel federal workers’ upcoming pay raise, after granting them a 1.9 percent pay increase in 2018, less than the 2.1 percent that was expected. Their lean circumstances mirror a broader savings problem among low-income workers and follow a long period of real-wage stagnation, even as profits for partnerships and individual-owned companies—many of which are operated by wealthier Americans—have risen. The closures also exposed how, in some places that sharply limit eligibility for assistance, the safety net has been rendered threadbare, with food programs appearing especially inadequate.
That wobbly foundation was given a few extra wobbles by the shutdown. Federal employees and contractors now going back to work face the prospect of another shutdown in three weeks, even as some of them manage higher debt and ruined credit. Income inequality more broadly continues to rise. Public trust in government and the economy is faltering. According to the University of Michigan’s ongoing poll, consumer confidence this month plummeted by almost eight points, erasing almost all of the gains built since 2015.