Federal Shutdown Over, but Woes Continue

Blacks, Minorities Feel the Brunt During Holidays

Stacy M. Brown | 11/27/2013, 11:23 a.m.
While many converge on retail stores on Black Friday, the bargains offered during the busiest shopping day of the year ...
Rep. Elijah Cummings (D-MD 7th District) Courtesy Photo

During the shutdown, funds for one million children in Head Start programs across the nation expired, which also hurt blacks because 34 percent of those who participate are African American.

Other programs also took a hit, including Title I education grants, which provide much-needed assistance to 20 million children, of which 27 percent are black, in the nation’s poorest school districts.

Additionally, the review of new student loan and federal grant applications have been delayed, placing 81 percent of black students at risk who borrow from the government to cover school costs.

“So you [had] people losing services, people losing pay and you’ve got a situation where uncertainty is created,” said Rep. Elijah Cummings, (D-Md.).

“You cannot put a dollar value on uncertainty, but it makes it almost impossible for people to make decisions about spending. They’re reluctant to spend and that has a spiraling effect in our community,” said Cummings, 62.

The longest federal shutdown lasted 21 days – beginning in December 1995 until January 1996.

“This shutdown has minimal effects in the short term, but long term, that’s a different story,” said Jaroslay Borovicka, an assistant economics professor at New York University in New York. “Other countries don’t just shutdown their government, they have a temporary backup where they use an old budget,” said Borovicka, 28.

While the full economic effect of the shutdown won’t be known for quite some time, economists and others said spending at retail stores fell nearly one percent, mortgage applications dropped five percent and auto sales plummeted about two percent, of late.

Overall, the shutdown cost the economy $24 billion, according to Standard & Poor’s economist Beth Ann Bovino.

“So, while everyone is shopping on Black Friday, there are many of us who won’t be able to, and that’s a direct effect of the shutdown,” said Shenil Wright, a benefits analyst at the Social Security Administration in Southeast Washington, D.C.

“I’m sure there are plenty of bargains,” said Wright, 57. “But, bargains don’t mean anything if you have nothing to spend.”