Government Shutdown Impact - New Layoff Announcements

from Challenger Gray and Christmas

An estimated 800,000 Federal workers missed their first paychecks last week. That could mean the economy lost a pre-tax $4.3B last month, and each month that workers are unpaid.

According to the Bureau of Labor Statistics, an average of the median salaries in 2013 equaled $62,229 per year. Federal workers received a 1 percent pay raise each year 2014-2017 and a 1.4 percent pay raise in 2018, making the estimated average annual salary $65,012.19. Multiply that by 800,000 federal workers, divide by 12, and subtract 22 percent in taxes, and the economy could lose $3,380,993,880 in consumer spending per month.

"This estimate does not include contract workers who are going without pay, or the restaurants, transportation agencies - cabs and trains - that are losing money as these workers go unpaid and not at work. The number could easily balloon to over $5 billion monthly," said Andrew Challenger, Vice President of global outplacement firm Challenger, Gray & Christmas, Inc.

Job Cuts

BlackRock Inc., SpaceX, and BNY Mellon are just some of the U.S. companies announcing layoff plans as the year begins.

  • New York-based BlackRock will cut 3 percent of its staff or 500 positions globally.
  • BNY Mellon announced plans to cut 400 workers.

Financial companies announced 42,199 job cuts in 2018, 162 percent higher than the 16,119 cuts announced from Financial firms in 2017.

Meanwhile, SpaceX, owned by Elon Musk, reported it would lay off 10 percent of its workforce, with 577 of those cuts at its Hawthorne location, according to a WARN filed with the state of California. The company confirmed it had over 6,000 workers after the cuts. The separations are reportedly due to internal slimming down to meet its goal of interplanetary travel and space-based global internet service. SpaceX plans its first cargo run in 2022 and to put humans in space by 2024.

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