So far, the federal government shutdown is having a mixed effect on Connecticut businesses, with an intervention by the U.S. Defense Department carrying the biggest impact—by keeping thousands of Connecticut workers on the job.

Now, the Congress is also facing an October 17 deadline to decide what to do about the nation’s debt ceiling.     

“It’s vital that the shutdown and looming debt ceiling decision both be resolved as soon as possible,” says Pete Gioia, CBIA economist, “because the economy is still too fragile.”     

DOD Directive

While the shutdown at first threatened major furloughs and stoppages among Connecticut manufacturers with defense-industry contracts, a directive from U.S. Secretary of Defense Chuck Hagel kept thousands of employees throughout the state at work.

Connecticut is home to some of the nation’s most prominent defense-related manufacturers, and they are supported by a vast manufacturing ecosystem in the state of small and large shops and service providers.

SBA Shutdown

Another factor with a potentially major impact on Connecticut businesses is the shutdown of the U.S. Small Business Administration (SBA). The SBA’s Connecticut office in Hartford is closed, with no new loans being booked and all training programs and counseling sessions cancelled.

CBIA surveys have shown an improving credit conditions, especially for small businesses, but the SBA is a critically important complement to many bank loans to businesses that are newer, smaller, or have some challenges in obtaining credit.

“Obviously, anything that could affect small business credit is of great concern,” said Gioia.

Meanwhile, interactions with many other federal agencies have been affected by the shutdown.

EPA

Any major construction projects in the state may need the approval of the federal Environmental Protection Agency (EPA). But that agency is in shutdown, which could hold up those projects.

FDA

Major commercial projects, such as new pharmaceuticals, may need the approval of the U.S. Food and Drug Administration (FDA). But that agency’s activities have been narrowed by the shutdown.

IRS

The Internal Revenue Service advised taxpayers to continue to file and pay taxes as normal--including those applying to individuals, corporations, partnerships and employers. Regular payroll tax deadlines remain in effect as well.

E-Verify and Immigration

The federal E-Verify service--the free Internet-based system that allows businesses to determine the eligibility of their employees to work in the U.S--is closed due to the shutdown.

This does not, however, affect the Form I-9 requirement: Employers must still complete the Form I-9 no later than the third business day after an employee starts work.

The U.S. Department of Labor’s Wage and Hour Division has effectively shut down, and the DOL has curtailed all immigration-related activities.

OSHA

OSHA says it is handling only “emergencies involving the safety of human life or protection or property.”

NLRB

All National Labor Relations Board field offices are shut down and the NLRB issued public guidance on its matters (including an extension for filing documents).

EEOC

The federal Equal Employment Opportunity Commission is operating on only a skeleton crew nationwide.

State website

According to reports filed by Connecticut state agencies that routinely interact with businesses, things are mainly status quo for now for their operations.  (More information is available on this Office of Policy and Management website.)

The Department of Economic and Community Development says programs that have some federal funding, including the state’s Subsidized Training and Employment Program (STEP); CONNSTEP, the state’s manufacturing extension program; and the network of Small Business Development Centers across Connecticut, will keep operating normally.

Businesses should expect no changes to the operations of the Department of Labor’s Workplace Standards Division, and the state Workers’ Compensation Commission. 

Regular unemployment benefits to the unemployed will continue, says DOL; and federally funded unemployment benefits for the Emergency Unemployment Compensation (EUC) program also will continue to be paid (but with a 19.2% reduction through the week ending November 2 due to federal sequestration).

But the state’s five Workforce Investment Boards are already working on reduced funding due to the federal budget sequester, and there’s concern in the state DOL that money for the boards will dry up with a prolonged shutdown. 

DOL also says its Employment Training Administration staff, in most cases, won’t be available to answer questions or provide technical support.  But funding to grantees will continue, and fiscal and performance reporting obligations should be maintained by grantees.

If you have any questions about state or federal workforce issues during the shutdown, contact CBIA’s Government Affairs staff at 860.244.1900.