How the machinations on Capitol Hill stifled Silicon Valley.
The government shutdown which struck fear into the hearts of federal workers and citizens alike was finally resolved with an interim appropriations bill being passed on October 16. Nearly a million government workers were indefinitely furloughed, with a further 1.3 million asked to report to work with no idea of when they would be paid.
But the pinch was felt far beyond the public sector. Private enterprise of all stripes had to endure nearly three weeks of uncertainty. As a dynamic sector responsible for a disproportionate number of jobs, the tech industry was among the worst hit. The ripple effect of the shutdown is yet to be fully realized. Let's look at six areas of work that ground to a halt when the political spanner was thrown in the works...
Conducting Government Business
Each and every company that does business with the federal government was affected by late payments. Independent contractors were effectively out of a job until the situation was finally resolved. This had a major impact on the Microsofts and Googles of this world, (both of whom have big federal contracts) but the effect was even more devastating for independent contractors who relied on providing government tech services to small businesses.
Access to Public Information
The shutdown meant federal websites were no longer being updated. It also stymied requests for information under the Freedom of Information Act will. Some public information went offline altogether. The FTC website was down during the entire debacle, preventing consumers from filing complaints or registering for Do Not Call. With the resumption of normal operations, tech firms are dealing with a huge backlog of customer queries.
Applying for Radio Frequencies
The FCC website was also unavailable during the shutdown. This was a biggie, and should have garnered far more media outrage than it did. The effect on mobile communications companies was disastrous: no FCC means no spectrum management, so any new applications for space on the radio spectrum had to wait until the situation in Washington was resolved. Cell phones, ISPs, tablets - all mobile devices are reliant on the Office of Spectrum Management keeping the airwaves running. It’s a critical resource that was lumped in with ‘non-essential’ federal operations during the shutdown.
Starting a New Business
The United States Small Business Administration was forced to shut down along with most of Washington. Loan applications were disrupted, creating yet another pipeline that will take months to clear. Anyone creating a startup business plan is well-advised to wait until 2014 before applying for federal assistance.
Tech workers who regularly travel abroad experienced massive delays for visa and passport applications. Some documents – such as the H-1B – were not processed at all.
All IPOs were halted mid-process, and new filings were banned outright. This was bad news for blue chip firms, with Twitter and various other major players prevented from floating their stock.
Some operations tried to continue as normal. The U.S. Patent and Trademark office remained open, as did the U.S. Postal Service, but the real impact of the government shutdown won’t be clear until final quarter reports are returned. As we head into the new year, the true effect of the political deadlock will become starkly clear.