For the past decade, American families and businesses have been on a financial rollercoaster as a result of a faltering economy.
And now furloughs, mostly caused by sequestrations and budget cuts, have not only impacted government employees, but non-government personnel and families are adversely feeling the effects.
In March, when Congress and the president reached no budget deal to reduce the deficit, sequestration was put into place to cut spending from federal jobs across the board.
Recently, the U.S. Department of Defense announced that a total of 680,000 of its employees would be given furloughs, which equals 11 days (one day a week) of unpaid leave starting this month.
Although there seems to be a lot of uncertainty at the federal level, Deanna Oware, deputy director at the Indiana State Budgeting Agency, said there hasn’t been a huge impact on the local economy, “at least not in this fiscal (2013) year.”
“It really hasn’t been that much of an impact at the state level either,” Oware said.
What lies ahead for private sector businesses, however, depends on federal employees spending habits, according to a local economy expert.
“If federal employees are furloughed or lose jobs, their spending on items such as food, clothing, shelter and services should be reduced, which would hurt private sector businesses,” said William Rieber, Ph.D., professor of economics and director of graduate studies in business administration at Butler University.
As families and businesses try to recover from the so-called “Great Recession” of 2007, the onset of the new budget cuts make that effort even more challenging.
“Most families can weather furloughs, as long as they have and expect to retain their government jobs,” Rieber said. “If these furloughs eventually turn into permanent job losses, then the effects on family spending are more pronounced and the impact on non-government businesses will be more visible.”
One local government program can already see the effects.
Head Start of Indiana, which serves more than 15,000 children in the state, will not be enrolling children at all this summer, according to Cheryl Miller, executive director of the Indiana Head Start Association.
Miller said they have already notified their staff of layoffs, which came earlier than predicted, and to make matters worse, Head Start staff is not eligible for unemployment.
“It’s come down pretty hard across the country,” she said.
Head Start of Indiana has 42 different grantees and provides quality child development services to economically disadvantaged children and their families.
“For disadvantaged families, to ask them to take this kind of a hit, it’s just questionable in my book,” said Miller in a newspaper article.
In 2011, a total of 28,000 low-income working families with children lived in Indianapolis, according to the Kids Count Data Center.
Without programs like Head Start, low-income families could lose access to early education for their kids, as well as vision, dental and hearing services.
In the 25 years Miller has worked at Head Start, she said this is the largest cut she’s ever seen.
The program will have to slash anywhere from $100,000 to $200,000 from its budget.
The Indianapolis Public Schools (IPS) system, on the other hand, has also seen its share of budget cuts and layoffs this year.
In the beginning of April, IPS announced that they could be cutting dozens of staff members’ jobs. Today, those layoffs have materialized.
The government-led sequester, however, has had very little effect on IPS so far, according to John Althardt, IPS spokesman.
Recent IPS layoffs are part of the district’s attempt to reduce a $30 million budget deficit.
If budget cuts were made to IPS as a result of sequestration, it would hurt the school’s special education program mostly, which is part of a government Title I grant.
“We hope that before that comes to us, we think about it and make sure we’re making decisions that are in the best interest of our children, especially our at-risk children,” Althardt said.
In light of the recent layoffs, Althardt expressed his empathy for IPS teachers and staff.
“It’s never easy to lay off people, especially people who work to help children,” he said.
Moving forward, Head Start’s executive director Miller offers hope and can see a positive change in the future of the economy.
“It’s very important to watch how your lawmakers vote,” she said. “I think we can hold onto strong bipartisan support. As a nation, we’re going to get back on our feet.”
