THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, November 19, 1995 TAG: 9511190157
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY LISE OLSEN AND LYNN WALTZ, STAFF WRITERS
LENGTH: Long : 115 lines
Thousands of families in Hampton Roads could be trimming their household budgets instead of their Christmas trees if federal layoffs continue this week.
Although the exact number is unknown, from 20,000 to 26,000 local federal employees are believed to have been locked out of their offices since Tuesday afternoon because of the budget deadlock in Washington.
And some folks already are cutting back: Joan Luoto, an engineer at NASA, said she's considering homemade gifts for Christmas this year. Luoto and her husband are both off the job because of the furloughs.
``I'm sitting here working on the checkbook and deciding how much to pay on the bills,'' she said.
But beyond individual workers and their families, the impact of the federal shutdown in Hampton Roads will not be felt unless it lasts many more weeks, local economists say.
``It's mainly an impact on the individual - not the economy,'' said Arthur L. Collins, executive director of the Hampton Roads Planning District Commission.
Here's why:
Collectively, all civilian federal jobs represent only about 7 percent of the total work force in Hampton Roads, which is about 637,100 nonfarm workers, according to the Virginia Employment Commission. And only about half of those federal jobs are affected by the shutdown, according to information from the Navy, NASA and Fort Eustis, some of the biggest local federal employers locally.
On average, a federal worker spends only about $105 of their $700 weekly paycheck on nonessential items. If as many as 26,000 were laid off, that would equal about $2.7 million per week, or less than 1 percent of the total local spending, said Gilbert Yochum, chairman of the economics department at Old Dominion University.
For a few of the lowest-paid workers - folks who live paycheck to paycheck - times will be tight.
But most federal workers probably won't cut back that much on spending, economists say. That's because they expect to be paid retroactively, and can rely on savings and credit cards to get through temporary shortfalls. Many also can rely on their spouses' paychecks. And their ``long-term income'' probably won't be affected, Collins said.
``They'll get their jobs back and they'll get their money back as well,'' Collins said. ``Even though in the near term they're stretched and pinched for spendable income, they'll continue spending.''
Workers are most likely to cut back on optional expenses, like meals in restaurants or consumable goods, economists said. ``You're going to see it at Hecht's and Circuit City, and you're not going to see it at Food Lion,'' Yochum said.
Retailers fear that workers will stay home the day after Thanksgiving - usually the biggest shopping day of the year. And the longer federal workers stay off the job, the more they might postpone their shopping.
Beth Baker, who was furloughed from her post as deputy public affairs officer at the Norfolk Naval Base, usually gets all her holiday shopping done early. But she won't hit the malls next week, she said, unless she's back on the job.
``I might be a last-minute shopper this year,'' she said.
Collectively, a lot of last-minute shoppers would hurt those local retailers who rely heavily on the Christmas season.
``No question about that: If it lasts for a while, it will have a significant impact on Christmas,'' said Kenneth M. Gassman Jr., a retail analyst with Davenport & Co. of Virginia Inc. ``If it ends . . . Monday and people get paid, there won't be that much of an impact. But it has to come to a rapid conclusion, and they have to get paid. That's the trick.''
Wednesday was a normal payday for U.S. military members. Civilian employees of the Defense Department were paid Friday, since the pay period ended before the partial government shutdown began. If the budget crisis is not resolved by Thanksgiving weekend, paychecks in the next two weeks could be delayed.
Economists estimate that, overall, 45,000 to 57,000 people in Hampton Roads work directly for the federal government in civilian jobs. More than 85 percent of those federal jobs are defense-related, according to the Virginia Employment Commission.
Neither economists nor federal officials know exactly how many people have been furloughed locally or nationally, because each agency made its own decisions about which workers are considered essential.
The shutdown also has affected defense contracting, a multimillion-dollar industry in Hampton Roads. It's hard to say how many of those workers are affected.
The shutdown has put some federal contracts in limbo. For example, Larry A. Dennis, president of SEEMA, a large local defense contractor, said he's not receiving expected orders from sites in Hampton Roads, Arkansas and Colorado. Dennis said he has had to lay off 40 local workers because of the closure of the NASA Langley operations. The difference between Dennis' employees and federal workers is that they will not be paid for the time they spend off the job.
At least one local shipyard has laid off workers as well. Marine Hydraulics International Inc., a small Norfolk yard, has laid off about 65 workers, but executives there said they could return to work as soon as Monday if the Navy gets its act together and starts processing the yards' bills again.
Norshipco, the region's largest shipyard, didn't lay off anyone Friday, and doesn't have any plans to lay off anyone yet, a spokeswoman said. ``It's really a wait-and-see approach,'' she said.
In the meantime, economists disagree about how long it will take for the region to feel any real impact. Perhaps weeks, perhaps months.
But few local economists think the shutdown will last that long - in part because the political stakes will rise along with the economic ones. Federal workers already are angry.
``They're still getting paid on Capitol Hill. That's where the real frustration is. They don't feel it,'' said Luoto, the NASA engineer.
And if the lockout stretches on, other citizens and retailers will get angry, too.
``These politicians are putting their political lives'' on the line, Yochum said. MEMO: Staff writers Christopher Dinsmore, Stephanie Stoughton and Mylene
Mangalindan contributed to this report.
by CNB