Believe or not, but hundreds of thousands of federal employees missing work may prove to be just the beginning of the 2013 government shutdown story. Not only will the economy incur exponentially more damage the longer the shutdown lasts, but as logistical limitations mount and already-appropriated funds run dry, the personal stories of hardship and suffering will become more numerous and dire as well. From senior citizens who can’t obtain the Social Security money they depend on for survival to students who are unable to secure the loans they need to pursue higher education, the unintended consequences of these nonsensical political games will continue to mount until we hit a breaking point. The question is whether the breakthrough will come in the form of a practical resolution to the standoff or irreparable damage to the country’s economy and reputation?
Interestingly enough, while sick children and disappointed World War II veterans have only been able to prompt piecemeal funding proposals, the anger of key constituencies may just prove to be the impetus needed to break the Congressional stalemate, particularly since Republican-leaning states stand to be hit disproportionately hard by a prolonged shutdown.
WalletHub came to that conclusion after analyzing seven key areas in which government inoperability will affect citizens and then ranking their relative impact on each of the 50 states as well as the District of Columbia. More information about these metrics as well as a breakdown of our findings can be found below.
- DC, Maryland, Alaska, Hawaii, and Virginia have the most federal workers per capita and are thus disproportionately affected by the shutdown’s immediate impact.
- DC, Virginia, Alaska, New Mexico, and Maryland receive the most federal contract money per capita, which means folks in those areas stand to lose out even if they don’t technically work for the federal government.
- Small business owners from the Dakotas, Colorado, Alaska, and Michigan who are looking for funding are hurt most by an inability to garner SBA loans, as those states have displayed the highest small business borrowing rates in recent years.
- Officials in West Virginia, Maine, Arkansas, Alabama, and Vermont should be particularly concerned about a prolonged shutdown, as their states have the most senior citizens per capita.
- Delayed mortgage closing will have the largest impact on Hawaii, Florida, Arizona, Maryland, and Louisiana – the five states in which real estate accounts for the greatest portion of gross product.
- Disruptions to federal student aid programs would be especially harmful to Georgia, Mississippi, Arkansas, South Carolina, and Louisiana, as those states boasted the greatest number of FAFSA applications per capita during the third quarter of 2013.
- Alaska, Virginia, Montana, Wyoming, and Maine have the most veterans per capita and would therefore suffer most from a lack of VA funding, which could result from a drawn out shutdown.
Most & Least Affected States – Overall (1 = most affected)
|4||District of Columbia||21||Vermont||38||Arkansas|
States with the Most Federal Employees Per Capita
|1||Washington, D.C.||6||New Mexico|
States with the Most Federal Contracting Dollars Per Capita
States Most Affected by Disruption of SBA Loans
States Most Affected by Social Security Funding Shortages
|1||West Virginia||6||South Carolina|
States That Rely Most on Real Estate
States with the Most Q3 2013 FAFSA Applications Per Capita
|4||South Carolina||9||North Carolina|
States with the Most Veterans Per Capita
It’s interesting to note that even this study was affected by the government shutdown, as key federal data sources – including the Census Bureau and the Small Business Administration – have been disrupted due to a lack of manpower. WalletHub was nevertheless able to garner enough information from other public data sources to analyze each state and the District of Columbia in terms of the following seven metrics.
- Federal Workers Per Capita (weight = 1): Provides a sense of where the largest population segments are currently out of work due to the shutdown. This metric was given full weight in the study because the effects are already being realized.
- Federal Contract Dollars Per Capita (weight = 1): Illustrates which areas of the country rely most heavily on federal contracting work, much of which has also been put on stand-by due to the shutdown.
- Small Business Lending Per Capita (weight = 0.5): Identifies which areas of the country tend to be most reliant on loans from the U.S. Small Business Administration – applications for which cannot be processed during the shutdown.
- Real Estate as Percentage of GSP (weight = 0.25): Gauges where real estate is most important to the local economy and therefore which areas of the country stand to suffer most due to FHA staffing shortages and the inability of lenders to verify applicants’ income via tax returns and thus proceed to loan closings.
- Social Security Payments Per Capita (weight = 0.20): Illustrates where a disruption to Social Security payments – which President Obama says will occur without an increase to the debt ceiling – will be felt most acutely.
- Student Aid Applications Per Capita (weight = 0.20): While Pell Grants and federal direct student loans for the 2013-14 school year will not be affected by the government shutdown, drastically reduced staff and concerns about the debt ceiling stand to cause long waits for FAFSA application processing as well as funding issues in the future. In addition, government-sponsored initiatives such as Race to the Top, Investing in Innovation, and Promise Neighborhoods are due to run out of money on Dec. 31.
- Number of Veterans Per Capita (weight = 0.20): The Department of Veterans Affairs only has enough money to cover disability and pension claims as well as educational and rehabilitation benefits through October. This metric identifies the areas that will be hit hardest as a result of dwindling funds.
Data used to conduct this study is courtesy of the Department of Education, the U.S. Small Business Administration, Realtor.org, the Brookings Institute, FedsDataCenter.com, and the U.S. Department of Veterans Affairs. For each metric, the most recent data available was used.