TLDR: Government shutdowns can have a big impact on the software industry. Some specific examples include:
- Technology projects stop receiving funds
- Authoritative data source services go down
- Transportation industry becomes less efficient
- Many Tech projects are affected indirectly
- Tech revenue goes down during
Starting on December 22, the US Government was shut down for the longest period of time of 35 days. This article lists the effect of the government shutdown on software industry but before we go further let’s start with why government shutdown happens.
Why government shuts down?
In the US, the government shuts down due to disagreement on the budget. Government fiscal calendar starts on October 1st and ends on September 30th. Ideally, Congress is supposed to allocate and approve the budget by September 30. However, this doesn’t always happen due to a disagreement between various branches of the government. The shutdown at the end of 2018 instance, there was a disagreement between the executive branch (President Trump) and the Congress for the funding of border wall US-Mexico for $5 billion. Starting September 2018, the Congress extended funds on December 21. On December 22, various non-essential government organizations came to a complete halt.## Which parts of the government get affected by the shutdown?
During the “shutdown” government stops paying the non-essential government institutions. This includes the following departments-* Agriculture, Rural Development, Food, and Drug Administration
- Commerce, Justice, and Science
- Homeland Security
- Interior and Environment
- State, Foreign Operations
Source## What does the shutdown mean for software industry?
I overserved the following effects during the 2018 shutdown-### Technology projects stop receiving funds:
The software industry in the USA, especially in the Washington D.C. region is heavily concentrated on government contracts. This means all the technology companies depended on government funding to pay their engineers, personals and business expenses. Though many companies have “rainy day fund” saved up for these types of situation, there is a limit to the period an organization can absorb this “shutdown” effect. Basically, the software has a risk of running out of the fund which could lead to not paying their employees on time, not being able to purchase things including (hardware, software, subscriptions, and other business expenses).
Authoritative data source services go down
Many authoritative data sources are operated and/or funded by the governments. Unfortunately, many of these data services are non-essential as far as the government is concerned. This means many of the connected software applications goes down or doesn’t provide up to date information.
For instance, the following data sources were down and/or not up to date by the 2018 shutdown-
- Census Bureau – various data about people
- Bureau of Labor Statistics –data about jobs and the economy
- Agriculture statistical data – has data about supply and demand for agricultural products
- Bureau of Justice Statistics - data needed to create the show Law & Order
- Bureau of Transportation Statistics – Data about Air traffic, ports, traffic, freights
- Oceanic and Atmospheric data – Data needed for various weather calculations
- Data.gov - one biggest source of public data. A subset of linked data was not available during the shutdown.
I am aware of a project dealing with Oceanic and Atmospheric data project team. The team uses a variety of data sources to study, making predictions and produce different analytics based on past weather and climate data. This means our product is essentially useless since we can’t get up-to-date data. The world is transforming into data-driven decision making which would be rendered useless while authoritative data sources go down.
Furthermore, data collections stop. Due to a government shutdown, data can’t be collected when the linked specific government offices are closed. Which causes an information gap,
Transportation industry becomes less efficient:
Generally, transportation is an essential part of most jobs including software industry. Transportation industry becomes less efficient during the shutdown. Some specific examples include-* TSA employees (people who check your bag at the airport for a bomb) were not showing up resulting in huge lines during flight check-in, and flights get delayed or canceled.
- Many of the transit safely inspectors stop working resulting in risk in safety.
- Transit systems that depend on government funding trying to make their dollar stretch resulting in in-efficiency.
- No funds for the infrastructure construction project. So, your pothole will remain unrepaired during the shutdown.
Many Tech projects are affected indirectly:
Various government institutions are lined up to support each other. Though the agency a project may be directly linked to may not be affected, the supporting agencies can be.
For instance, NIST, an organization that’s responsible for measurements, standards, and industrial competitiveness, sets standards for many government tech projects. NIST was affected by the government shutdown which means tech projects linked to NIST were not effective while NIST employees were furloughed.
Tech revenue goes down during the shutdown:
Government is a big source of money circulation and government shutdown showed an ill effect on all of the tech companies due to people/businesses not spending. You can easily observe this data by looking at the stock data. Microsoft (MSFT), stock during the government shutdown fall 34% from it’s highest peak. The same pattern is seen on Microsoft(MSFT) and Amazon.com (AMZN) and many other tech company stocks. ush Data Link: Yahoo finance
Other indirect effects on people:
- City amenities go down – Government operated parks, rec centers, museums, and historical attractions are shut down.
- Crime increases – Law enforcement agencies work to stretch their money resulting in an increase in crime prevention and slowing down a criminal investigation
- Government websites aren’t maintained. Because of the shutdown, at least 80 government websites had their security certificate expired. Resulting in security vulnerabilities as well as downtime.
- IRS operations are halted – resulting in delayed processing on your tax refund
- Economy shows the signs of depression: Government employees don’t get paid. For the 2018 instance, 1.3 million federal worker’s payment delayed and 0.8 million people were locked of their paycheck source. Which means amount equaled to their paycheck isn’t getting circulated back to the economy. Some of the effects of US Great Depression is visible which becomes more extreme as the shutdown becomes longer.