Transcripts

How A Single Sequester Layoff Affects The Economy

MS. REBECCA SHEIR

00:00:09
Welcome to "Metro Connection." I'm Rebecca Sheir and this week we'll be talking about--to quote the language mavens a Merriam-Webster, "work done by several associates with each doing a part, but all subordinating personal prominence to the efficiency of the whole," or, to put it a bit more simply, teamwork.

MS. REBECCA SHEIR

00:00:34
We'll bring you stories from the playing field…

MR. MICHAEL SEATON

00:00:36
I don't relate to them a lot because they talk about bills, kids and housing and stuff, but you actually learn a lot from them.

SHEIR

00:00:44
…from the world of art…

MS. DOROTHY KOSINSKI

00:00:45
We've had help from many, many corners. It's all built on meaningful relationships.

SHEIR

00:00:51
…and from--I kid you not--the local karaoke scene.

MR. JESSE B. RAUCH

00:00:54
We're really focused on building a community. That is my top goal.

SHEIR

00:01:06
But we're going to kick off the show with a look at what happens when teamwork falls apart.

UNIDENTIFIED WOMAN #1

00:01:11
Over time the automatic across-the-board spending cuts could slow economic growth and lead to the furlough…

PRESIDENT BARACK OBAMA

00:01:17
…to allow a series of arbitrary automatic budget cuts…

UNIDENTIFIED WOMAN #2

00:01:20
…Republican congressman today, who said his constituents are suffering from what he called drama fatigue.

UNIDENTIFIED MAN #1

00:01:25
…before the Senate gets off their ass and begins to do something.

UNIDENTIFIED MAN #2

00:01:27
…that may lead to widespread delays in air travel.

UNIDENTIFIED WOMAN #3

00:01:29
…be forced to furlough food safety inspectors.

UNIDENTIFIED WOMAN #4

00:01:32
…Washington lurching from one crisis to another, that's part of the reason you're not seeing 11th hour talks right now to avert these forced spending cuts. Another reason? Well, watch and listen.

SHEIR

00:01:42
Sequestration is the buzzword in Washington right about now. And no matter what side of the political aisle you're on, most people would agree that teamwork has been in relatively short supply as this week's budget-cutting deadline has approached. Emily Berman wanted to get a handle on how the sequestration brouhaha is rippling through our local economy. So she reached out to WAMU's Public Insight Network and asked, how will the sequester affect you?

MS. EMILY BERMAN

00:02:08
And we got a lot of responses.

SHEIR

00:02:09
Oh, hey, Emily.

BERMAN

00:02:09
Hey.

SHEIR

00:02:11
So you got a lot of responses, which, I guess, is not so surprising in this region, given all the people who work for the federal government around these parts.

BERMAN

00:02:16
There are more than 600,000 people who work directly for the federal government or on government contracts. When we put out this question most of the people who wrote us said they were expecting furloughs and pay cuts, but there was actually one person who wrote saying she'd already been laid off.

SHEIR

00:02:33
And I take it you reached out to this woman.

BERMAN

00:02:35
I did.

MS. JULIE JOHN KNOTT

00:02:36
Thank you for calling Sonjara. This is Julie. How may I help you?

BERMAN

00:02:40
Her name is Julie John Knott. She's just shy of 50 years old and works as a secretary at a company called Sonjara. It's based in Falls Church, Va. and builds websites for different government projects.

KNOTT

00:02:51
So I'm at my desk in the operations corner. And I'm currently typing up a list of where everything is, so everybody can function without me.

BERMAN

00:03:01
Shioban Green, Julie's boss, has been running the company with her husband, Andrew, for 11 years. They've gone through ups and downs, she says, but nothing like this.

MS. SHIOBAN GREEN

00:03:11
There's sort of just this general freezing that I'm finding. I've got one contract we submitted in May 2011 that I'm still waiting on it being awarded. Every once in awhile we email them and say, is this still alive? And they say, yes, yes, yes. And that's not unusual.

BERMAN

00:03:24
They've cut Julie's job and told the rest of the staff, which is about 12 people, that unless new contracts come in they're going to have to make more cuts.

SHEIR

00:03:32
Wow, but Julie's already been cut. So I’m curious, if you take a look at her layoff, that single layoff, what does it mean to the local economy? Is there some sort of ripple effect?

BERMAN

00:03:42
There is. So think about it. On a regular day Julie starts spending money around 6:00 a.m. when she hits the gym.

KNOTT

00:03:49
I cancelled last week when it finally dawned on me that, hey, wait, I'm not going to be coming out here anymore.

BERMAN

00:03:58
That's $55 a month, plus an additional $35 for personal training sessions.

KNOTT

00:04:04
Walking into Starbucks.

BERMAN

00:04:06
There's a Starbucks just down the street where Julie typically orders a medium soy chai. The total is about $8.00 for breakfast. I met up with Julie around lunchtime and she had picked up some Thai food.

KNOTT

00:04:17
I'd like the coconut chicken curry, please.

BERMAN

00:04:21
That lunch was $8.95 plus tax, fairly typical she says.

SHEIR

00:04:25
But I'm guessing those visits to Starbucks and the Thai place are just the tip of the iceberg in terms of how she'll be making over her family finances, right?

BERMAN

00:04:33
Oh, for sure. There's CVS, where she estimates she spends about $15 a week. Her dry-cleaning bill will be lower, since it'll just be her husband's work clothes, not hers.

KNOTT

00:04:44
We probably won't go out to eat, you know, to a nice dinner like at the Bonefish Grill. So now it'll be more like once a month.

BERMAN

00:04:52
If you're asking how that reduction trickles through the local economy, a good person to turn to is Stephen Fuller, the director of the Center for Regional Analysis at George Mason University.

MR. STEPHEN FULLER

00:05:04
She's an economy unto herself and now her economic wings have been clipped. She can't spend as much.

BERMAN

00:05:10
So just for argument's sake, let's say Julie spends $500 a month going out to eat. And every dollar she spends, Fuller explains, can support a small fraction of another person's job. So if we imagine 1,000 people like Julie, suddenly not spending money at restaurants…

FULLER

00:05:28
So if we take her $500 and multiply that by 1000 of her, that would support 12.3 jobs.

BERMAN

00:05:35
That's 12.3 jobs for waitresses, cooks, the drivers who bring fresh produce to the restaurant and other people on that supply chain. So when Julie doesn't spend that $500 it's money out of other people's pockets, as well.

SHEIR

00:05:49
Well, let's take it even further then, Emily. What does all this budget cutting mean for our economy overall?

BERMAN

00:05:54
First of all, if the sequester stays in affect this year, Fuller says it would take more than $10 billion out of the local economy. That, he says, is a worst-case scenario. But more broadly, Fuller is optimistic about our economy. He says most likely we've seen the peak of federal spending come and go. If you remember, from 2007 through 2010, we were the fastest growing economy of any major metropolitan area in the US.

FULLER

00:06:23
Now we're one of the slower growing, large metropolitan areas. Instead of first we're tenth. And that's because the federal government isn't driving growth anymore.

BERMAN

00:06:31
Federal spending in our region has already started to decline over the past two years, $7 billion in all. That's a rate of 5 percent less each year.

FULLER

00:06:40
And in many ways, that is the rate of decline, which has been proposed by proponents of balancing the budget or reducing federal spending.

SHEIR

00:06:50
So is he saying then, that in essence, we've already experienced the first year of sequestration?

BERMAN

00:06:54
Exactly. Fuller says the Washington economy will keep growing, but it will be less dependent on government spending. Basically, we're diversifying. The mix of jobs is changing and we'll have more jobs in growth sectors like health and education.

SHEIR

00:07:09
Okay. But to go back to Julie's case for just a second. I mean, she has a family, right? So how are they going to cope with the loss of her salary?

BERMAN

00:07:16
Her husband is retired from the military and works at the Pentagon. He hasn't been affected by the defense cuts. And his contract runs for another two years. No guarantees after that. Now, with only one salary, Julie says the hardest thing about their new reality is not having money to help their kids.

KNOTT

00:07:34
Having to cut down on nice things, like helping out with a viola lesson for my daughter, you know. Now it's like, no, now you've got to cover those yourself.

BERMAN

00:07:44
If there is a silver lining in all this, Stephen Fuller says Julie shouldn't have a tough time finding a new job. He sees a growing need for office administration, but most likely not for a government contractor.

SHEIR

00:07:56
Well, Emily Berman, thank you so much for sharing Julie's story with us and walking us through this very complex topic.

BERMAN

00:08:03
You're welcome.

SHEIR

00:08:05
If you'd like to share how you're being affected by sequestration, consider joining our Public Insight Network. It's a way for people like you to share their stories with us and for us to reach out for input on topics we're covering. You can find more information at metroconnection.org/pin.
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