Tens of thousands of Marylanders missed paychecks last week as the federal government rolled into the longest shutdown in U.S. history.
An estimated $778 million in wages didn’t make their way to Marylanders’ bank accounts, according to a new report from the Maryland Bureau of Revenue Estimates.
The report, released Monday morning, used federal and state statistics, data on commuting patterns between Maryland and Washington, D.C., and other reports to estimate the shutdown fallout in the state.
An estimated 230,000 to 245,000 Marylanders hold federal jobs, and an estimated 90,000 workers are either furloughed or working without pay. The report also estimates that 163,356 residents are federal contractors and that about half of them are not being paid. The estimated loss in pay for federal workers every two weeks is $408 million, which is expected to be paid retroactively when government reopens. The wage loss in the private sector — where back pay is unlikely — is estimated to be $369 million.
It all ads up to less spending and fewer taxes being collected by the state, the report by Bureau of Revenue Estimates Director Andrew M. Schaufele concludes. Each bi-weekly payroll for which residents are not paid translates to roughly $57.5 million less in state and local income tax withholding and $2.1 million less in sales tax collections, according to the report.
Much of the income tax withholding loss will be returned if the federal government authorizes retroactive pay. Sales taxes are expected to recover when government employees are repaid, but the state is estimating that contractors will forego about 65 percent of their typical consumption of taxable goods.
The uncertainty surrounding the shutdown — how long it will last and if it will happen again — will also likely reduce business investment, according to the Bureau of Revenue Estimates report.
“These estimates demonstrate what we already knew — the unnecessary shutdown of our federal government is having a devastating effect on Maryland’s families and our state’s economic well-being,” Comptroller Peter V.R. Franchot (D) said in a news release accompanying the report. “Even if some employees do eventually get repaid, our economy will not be made whole and changes to long-term spending habits may cause further harm.”
Congress passed a bipartisan bill guaranteeing back pay for federal workers last week. The bill awaits President Trump’s action.