State workers brace for possible state shutdown

10:02 AM, Jun 24, 2011   |    comments
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COTTAGE GROVE, Minn. -- It's now down to the final week before a state shutdown could go into effect due to a budget stalemate.

On July 1, up to 36,000 state workers could be temporarily laid off.  Experts say that could have a devastating effect on the state economy.

"There's no question if we have a state shutdown, it's going to have a dramatic and immediate impact on the unemployment rate in the state of Minnesota," said Hamline University Professor David Schultz.

Schultz said he's done basic calculations -- using data from the U.S. Bureau of Labor Statistics -- to determine the exact impact on the state economy.

"If all 36,000 state workers who got notices that they were going to be laid off actually get laid off, we immediately, on July 1st, push our unemployment rate up to 7.8 percent -- a 20 percent increase," Schultz said, adding that "multiplier effect" would result in an even bigger impact, given state workers' decreased desire to spend during the shutdown.

"That means the restaurants cut back. That means the stores cut back. That means in the private sector, they then have to cut back. And they might have to lay off people too," he said.

Meantime, individual families are bracing for the impact of just what a state shutdown will do to their quality of life.

"There's a good chance of losing my house, because we do live paycheck to paycheck," said Jayne Hernandez of Cottage Grove.

Hernandez works for the MN BCA and is awaiting word on whether her job is deemed "essential." Until she gets final word on that and the shutdown itself, she has some words for the lawmakers behind the budget.

"All I ask is compromise. Be willing to give and take," she said.

(Copyright 2011 by KARE. All Rights Reserved.)

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