Businesses that work with the U.S. government have lost an estimated $12 billion in revenue during the first four weeks of the ongoing federal shutdown, according to a new report released Thursday by the U.S. Chamber of Commerce.
The report, which is being circulated to members of Congress, found that about 65,500 small businesses nationwide are losing around $3 billion per week as the shutdown continues. The affected firms range from suppliers of advanced equipment and office materials to landscaping and maintenance providers, according to details shared with CNBC ahead of the report’s public release.
Maryland and Virginia — both home to large concentrations of federal contractors — have been hit the hardest. Other states, including Alabama, California, Florida, and Texas, have also seen steep declines in government contract revenue since the shutdown began on October 1.
“For many of these small businesses, federal contracts represent a sizable portion of their overall revenue,” said Neil Bradley, executive vice president and chief policy officer at the Chamber of Commerce, in a letter accompanying the report.
Bradley emphasized that while federal employees are guaranteed back pay once the government reopens, contractors have no such protection. “When the government reopens, rarely are contractors made whole,” he wrote. “The purchase of many goods may only be delayed by a government shutdown, though some are permanently forgone.”
He urged lawmakers to pass a short-term spending measure to resume government operations and called on Congress to consider steps to compensate contractors for their financial losses. “We also urge Congress to consider ways to help make federal contractors, especially small business contractors, whole,” Bradley added.
A stopgap funding proposal sponsored by Republicans in the House has been brought to a vote 13 times in the Senate but has repeatedly failed to reach the 60-vote threshold. Democrats have refused to back the bill without an extension of enhanced Affordable Care Act premium tax credits, which are set to expire this year.
The Congressional Budget Office (CBO) said that while some of the lost funding to contractors could be recovered once the shutdown ends, the broader economy is still taking a hit. The CBO estimates that the shutdown has already cost the U.S. economy at least $7 billion in gross domestic product due to furloughed federal employees working fewer weeks.
CBO Director Phillip Swagel told House Budget Committee Chairman Jodey Arrington of Texas that a six-week shutdown could trim $11 billion from the economy, while an eight-week closure could cost as much as $14 billion.
As the shutdown drags on with no resolution in sight, pressure is mounting on Congress to act — and for tens of thousands of small businesses that rely on federal contracts, every additional week means mounting losses with no guarantee of recovery.
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