Sequestration Impact?

[laurence]

I work for a reasonably large defense contractor, and we are being threatened with a 20% (one day a week) furlough, or some iteration of that. So far no 30 day notices have gone out, though. I think everyone is holding their breath for a deal I don't see coming. Anyone else impacted? Have plans for adjusting to it? My wife said, "Simple, will reduce our retirement savings..." which I don't like the sound of. I'd rather take a short term hit to lifestyle rather than push out the retirement date ( I guess that's why I'm on this board...) but cutting the cable tv isn't going to make up for $1k+ take home loss.

 

[ls99]

I'd vote for the lifestyle short term hit. What you can't/won't put towards retirement will be much harder to replace.

 

[mickeyd]

I work for a reasonably large defense contractor, and we are being threatened with a 20% (one day a week) furlough, or some iteration of that. So far no 30 day notices have gone out, though. I think everyone is holding their breath for a deal I don't see coming. Anyone else impacted? Have plans for adjusting to it? My wife said, "Simple, will reduce our retirement savings..." which I don't like the sound of. I'd rather take a short term hit to lifestyle rather than push out the retirement date ( I guess that's why I'm on this board...) but cutting the cable tv isn't going to make up for $1k+ take home loss.

My son (a USAF civilian) was facing this 20% furlough but just decided to quit and take employment with a contractor making 2X his USAF pay in addition to a tidy signing bonus. I wonder how many more good workers are bailing out?

 

[donheff]

My son works for a big contractor. His firm is laying people off rather than furloughing them. They don't like paying the benefits for furloughed employees.

 

[laurence]

I fear the layoffs might be the ultimate decision. I've got several good coworkers who left for non-defense tech firms over the last year. This is only going to make it worse.

 

[plex]

From what I've read, layoffs are pretty common for the contractors. The non-contractors are the ones who are much more likely to just get furloughed.

 

[FUEGO]

Our school system warned that low income schools might lose some special funding (Title 1 money??). Our neighborhood school that our daughters attend fits in that category. The school system is also posturing for increased funding from local and state sources (budget time!) so who knows what the ultimate impact will be (they can always shift funds to focus on priorities).

Job wise I haven't seen any impact, but I expect there could be a negative impact a few years down the road if austerity continues or increases. Fits in nicely with my FIRE plans so no big worries. I'm actually glad for the sequestration. It will save federal money that we don't have, and force important budget discussions to take place. We spend so much on national defense, and that is money we don't have. Unfortunately it results in "economic disruptions" like the OP may soon experience, and the adjustments will be uncomfortable short term.

 

[target2019]

I work for a reasonably large defense contractor, and we are being threatened with a 20% (one day a week) furlough, or some iteration of that. So far no 30 day notices have gone out, though. I think everyone is holding their breath for a deal I don't see coming. Anyone else impacted? Have plans for adjusting to it? My wife said, "Simple, will reduce our retirement savings..." which I don't like the sound of. I'd rather take a short term hit to lifestyle rather than push out the retirement date ( I guess that's why I'm on this board...) but cutting the cable tv isn't going to make up for $1k+ take home loss.

This is playing out in different ways where I toil.
1) Most civilian employees of DoD are prepared for or have already received furlough notices.
2) Contract employees have been laid off.
3) Furloughs and layoffs will happen.

#3 is officially out in the open in my megacorp. Some business units will see furloughs, while others (like my service-oriented one) have been said to be better suited for layoffs. It's a really odd time. Not a good time to be sixty and looking for work.

In the case of your furlough, maybe scale back the retirement contributions and do without a few things.

Could be a good time to find a part-time job.

 

[LitGal]

I'd vote for the lifestyle short term hit. What you can't/won't put towards retirement will be much harder to replace.

+1 When you retire, your other 4 days a week will be "furloughed" as well.

 

[laurence]

I'm starting to think the deafening silence from upper management means layoffs, not furloughs. We'll probably have to wait another month for real answers.

 

[imoldernu]

Saddest part is that the pain has no upside payoff.

 

[Milton]

I expect there could be a negative impact a few years down the road if austerity continues or increases.

That outcome seems pretty certain. The current situation is essentially unsustainable, and any political 'deal' that may be reached will only succeed in kicking the can down the road another couple of years or so.

Anyone who works in the MI complex would be well advised to explore other options. Easier said than done, but the writing is on the wall.

 

[EvrClrx311]

Layoffs seem to be what is occurring in the contracting world. From my vantage point, as someone who contributes a lot, it is a breath of fresh air. I had been complaining to management for the last 6 months about a guy who sits close to me in the office that came into work everyday to do his school work for his MBA. Whenever I'd task him to do work, he'd drag his feet to the point that I found him unreliable enough not to ask anymore. He seemed to do this with everyone as to position himself to not have any responsibilities. He was obviously the first to go.

In that way, the sequester is boosting productivity around here. Less people just chatting up the office, and more people working towards what we're paid to do. April 1st, I'm actually getting an 11% jump in pay on merit (completing my masters being a big part of it too).

I know this is just a micro example and understand some larger national companies are taking a much different approach. It is easier for them to just cut everyone by 10-20% than to find and weed out the bad apples. I don't envy people in those spots. I don't know what I'd do with a 20% cut in pay.

 

[laurence]

In that way, the sequester is boosting productivity around here.

Sequester is just the latest challenge for us, the military downturn has been going on for at least 2 years in our neck of the woods. The first round of layoffs felt as you described. By the 5th round we were like, "YOU HAVE GOT TO BE KIDDING ME!" All the dead weight has long since been cut. Now it's "which totally essential hard worker with extensive subject knowledge are you laying off?"

That's why we were hoping for furloughs.

 

[Accidental Retiree]

Sequester is just the latest challenge for us, the military downturn has been going on for at least 2 years in our neck of the woods. The first round of layoffs felt as you described. By the 5th round we were like, "YOU HAVE GOT TO BE KIDDING ME!" All the dead weight has long since been cut. Now it's "which totally essential hard worker with extensive subject knowledge are you laying off?"

That's why we were hoping for furloughs.

That sounds like the bank I w*rked at back 2006-2008. Five rounds of layoffs in the <2 years of my "unfortunate incarceration."

 

[ERhoosier]

Saddest part is that the pain has no upside payoff.

Except for promise of return to fiscal sanity in overall US gov't financial situation ....and hopefully avoidance of future deeper pain like they're seeing in southern Europe.

Many employees of private companies have gone through cutbacks during adverse economic conditions. Painful as it may be, gov't (& gov't related) employees are not immune. And neither are health care w#rkers from a relative's recent hospitalization experience as well as US national headlines (bipartisan budget cuts for Medicare/Medicaid).

Back to OP, I think history suggests more prudent course is cutback in spending. BTW- Cutting the cable bill MIGHT approach that $1k drop in take home pay. DW & I are considering this after our bill was just raised to >$130 per mo!!!

 

[target2019]

Sequester is just the latest challenge for us, the military downturn has been going on for at least 2 years in our neck of the woods. The first round of layoffs felt as you described. By the 5th round we were like, "YOU HAVE GOT TO BE KIDDING ME!" All the dead weight has long since been cut. Now it's "which totally essential hard worker with extensive subject knowledge are you laying off?"

That's why we were hoping for furloughs.

Government Furloughs. Contractor layoffs.

Just to add real-life to this, as you mentioned, layoffs have been ongoing for more that 2 years on the east coast. People outside of this industry are unaware of such things. I actually came into defense contracting at the peak of hiring. Since then it's been a gradual downhill march. The bottom 10% are definitely elsewhere. There have been buyouts for upper management. Overhead rates are reduced. It isn't enough, as the draw-down overseas will continue, and many of the support services will ratchet down.

At least where I am there is still deadweight. I'm sure some ops are running bare bones, but we have a multitude of repetitive processes. They seem to grow back like weeds.

 

[chasesfish]

Its just a frustrating, dumb way to do cutting that needs to be done.

Government officials just need to do a better job of ensuring taxpayers think they're getting $1 of value for $1 of taxes paid. Stop researching shrimp on treadmills.

Consider a 10th amendment commission and start delegating as much as possible to the states, where voters are actually close to their representatives. I like our local government, I think we generally get value for taxes paid.

 

[HFWR]

..."which totally essential hard worker with extensive subject knowledge are you laying off?"

In the case of my dept at former megaconglomocorp, the answer was "All"...

 

[bo_knows]

At my agency (I'm a contractor), the government has said that they are NOT doing furloughs, but they did say that they weren't sure how long they could keep that promise. A lot of contractors are getting notice that it will eventually effect their jobs.

My job is fairly safe, I think. My company just won a large contract in December, for which the entire premise of the contract was to consolidate and save the government money.

 

[Bimmerbill]

We should get our notice soon, I think next week. 1 day a week furlough. I asked if I could take July or August off for my 174 hours of forced time off, but we are limited to 16 hours in 1 2-week pay period. Dang.

Budget has been slashed even more from last years cut budget. Janitorial service may be cancelled, tho it was severely limited last year.

 

[just walk away]

I am FI and hoping for a voluntary separation package. Looks like we may get furloughed for a month or two, but then hopefully the separation package and I am finally FIRE. The voluntary package will not be all that great, but gives me a good excuse to finally be FIRE!

 

[YoungSaver]

Except for promise of return to fiscal sanity in overall US gov't financial situation ....and hopefully avoidance of future deeper pain like they're seeing in southern Europe.

Pretty big upside if you ask me.

 

[Keim]

The homeless shelter I volunteer at got notice from the feds last week. Plan for a cut of 5-9% from all fed sources. Gonna hurt some already needy folk.

Despite that, I actually like the overall idea of the Fed cutting its budget. I just think the chosen method was stupid. Like a doc giving you a choice between a careful surgery with an excellent success rate or amputation. Either works. Only one is the smart choice.