(The Center Square) – The federal government shut down at midnight Oct. 1, and while the basics are still running, research shows Virginia taxpayers could be left with costs that don’t go away when the shutdown ends.
More than 350,000 Virginians work in civilian federal jobs, one of the highest totals in the country. Thousands more serve in the military, reserves or National Guard.
Essential services like Social Security, Medicare, the postal service, and airport security remain open, but many other programs, from national parks to small business loans, are paused until lawmakers reach an agreement.
For everyday taxpayers, though, the most costly impacts may not show up right away. Christoph Herpfer, a business professor at the University of Virginia’s Darden School, told The Center Square, “Even taxpayers who feel no short-term effect of a shutdown are exposed to higher long-run costs through less efficient government, greater reliance on expensive contractors, and weakened institutional capacity.”
He continued, “The evidence suggests that shutdowns degrade government efficiency in ways that leave the public paying more for less.”
One of the biggest drains, Herpfer’s joint research with colleagues at Emory and Stanford shows, is turnover. After the 2013 shutdown, employees in heavily furloughed agencies were 31% more likely to quit within a year.
Many were highly skilled professionals, and when they left, agencies had to lean on contractors and temporary staff. That research found outsourcing costs outweighed payroll savings by nearly $1 billion per year in the following two years.
Errors and inefficiencies are another hit. The same research shows shutdowns increased the rate of inaccurate federal payments by more than one percentage point, adding hundreds of millions of dollars in annual losses.
It also found declines in regulatory enforcement and patenting, which meant slower innovation and weaker agency performance.
Perhaps the most lasting effect is morale. Herpfer and his colleagues’ research shows shutdowns undermine the sense of purpose that drives many to public service, eroding motivation and making it harder for the government to attract and keep talent.
Virginia leaders have responded to the shutdown, but the research suggests the more lasting costs come from how it weakens government capacity long after the headlines fade.
With an election five weeks away, the shutdown could influence how voters view the economy and government performance in what is already a historic governor’s race.
