When will California start to really feel the pain from the federal shutdown?

When will Californians, in and out of government, really start to feel the pain from the federal shutdown?

It’s coming, if the shutdown persists more than another week or two.

“It’s more of an accelerating burn than an on-off switch. You could see an accumulation of impacts that grow over time,” said Shai Akabas, vice president of economic policy at Washington’s Bipartisan Policy Center.

The shutdown, which has shuttered most federal agencies, entered its sixth day Monday, with no apparent end in sight.

So far, the impact appears minimal. While federal workers are not being paid and most offices are not offering services, Social Security, Medicare and Medicaid benefits are unaffected. Mail services continue.

“Does anyone really notice that there is a government shutdown?” asked Mark Schniepp, director of the nonpartisan California Economic Forecast. “There is not much pain or suffering yet. I doubt that there will be. Essential workers must continue on with their jobs. They could call in sick and mess up more services, but that’s uncertain.”

A painful shutdown?

Akabas said that once employees stop getting full pay, “the problems grow overtime.” Local stores are unlikely to get as much business. Bill paying will be delayed. Contractors and consultants who rely on government spending will have to decide how to fund their work.

Sung Won Sohn, president of Los Angeles-based SS Economics, found that a shutdown lasting two to four weeks had led to delays in permits, Small Business Administration loans, IRS processing, economic data releases and more.

Because of the shutdown, monthly unemployment data was not released Friday. The release, considered an important nonpartisan guide to the state of the economy, influences the direction of government economic policy.

The good news, Sohn said, is that “most of the activities recover once the back pay is given with no lasting economic impact,” as people spend on delayed purchases and bills, and the federal government deals with its backlogs.

But if a shutdown lasts more than five weeks, “consumer confidence dips, retail sales fall, business investment plans are delayed, and tourism and travel suffers in part due to TSA (Transportation Security Administration) staffing problems,” Sohn said.

What helped motivate President Donald Trump and lawmakers to end the last shutdown was frustration by air traffic controllers, who began calling in sick and disrupting air travel systems.

Furloughs and unemployment

Most government workers are paid every two weeks, so if this shutdown begins to rival the length of the last one – 35 days in 2018-19 – upcoming October paydays will also be in jeopardy. Most federal workers are due to be paid Friday. Military personnel are scheduled to get payments October 15.

Trump and Republicans are using the military pay halt to pressure Democrats to make a deal.

“I want you to know that the Democratic-induced shutdown, we will get our service members every last penny, don’t worry about that,” he told the Navy 250 celebration in Norfolk Sunday.

“It’s all coming, and even more because I’m supporting the across the board pay raises for every sailor and service member in the United States armed forces,” he said.

Californians without federal paychecks could seek some help from the state’s Employment Development Department, which manages the state’s unemployment system.

EDD has a special page where federal workers impacted by the shutdown can assess whether they can get unemployment benefits.

People can qualify if they are “out of work through no fault of your own, your official duty station of your last federal employer was in California, or you are a current California resident and are a U.S. citizen and your official duty station was outside the US, or have worked in California after your last federal employer.”

Those who are still working but not being paid are not considered unemployed and do not qualify for unemployment benefits, EDD said.

If a federal employee does receive benefits and later gets back pay from their employer for the same time period, they have to repay the benefits.

Health care premiums and October 15

Democrats are insisting that any shutdown-ending deal include enhanced health care premium subsidies for Obamacare-inspired policies continue past their January 1 expiration date. The potential pain of higher premiums could be felt as soon as next week.

KFF, a nonpartisan organization that studies health care issues, found that in the Sacramento area, a family of four, with each parent 40 years old and with children 8 and 11 and a $100,000 annual income, would pay $721 a month next year for a “silver plan” if the current subsidies lapse.

They now pay $543 monthly. A silver plan is one of the options Obamacare offers to those who qualify. The amount of the credit is tied to one’s income.

While that may seem a distant problem, consumers could very soon see the impact.

Open enrollment for Obamacare-inspired policies under the 2010 Affordable Care Act begins November 1 in most states. But renewal notices will start going out October 15. If no agreement on the subsidies is reached by then, those notices will reflect the higher premiums. Should an agreement be reached later in the year that includes the subsidies, premiums would be adjusted.

The ACA marketplace policies are available to lower- and middle-income California residents who earn too much to qualify for Medi-Cal but need help to pay for their coverage.

Covered California, which manages the state program, estimates that up to 400,000 of the nearly 2 million state residents using the program may have to drop their coverage if the credits end.

This story was originally published October 6, 2025 at 1:20 PM with the headline "When will California start to really feel the pain from the federal shutdown?."

David Lightman

McClatchy DC

David Lightman is a former journalist for the DCBureau