The shutdown of the federal government is wreaking havoc on the wallets and well-being of many federal contractors. Some small businesses are threatening unpaid leave. Other contractors are getting paid for fewer hours and trimming their spending. Some are even selling things around the house — furniture, diamond earrings — to make up for lost income.
But for now, Moe Jafari is trying to keep that from happening to his workers. Though 20 of the 200 people in his cybersecurity and IT firm have been told not to report to work as federal contractors because of the shutdown, he isn’t cutting their pay. Instead, he’s cutting his.
The chief executive of HumanTouch, a $35 million cybersecurity company based in McLean, Va., that gets some 90 percent of its business from federal contracts, Jafari decided not to draw a salary until the shutdown is over to help cover the costs of keeping on the furloughed contractors. His decision came after his senior management team — some 15 senior managers and executives — also decided voluntarily to take one day of their paid time off or leave without pay each week while the shutdown drags on.
“At the end of the day, none of them really signed up for this — this is my risk,” said Jafari, who wouldn’t share the size of his salary. “I decided I should be able to give up more.”
Many federal contractors are indeed giving up plenty. Unlike furloughed federal employees, who are set to receive back pay once the shutdown ends after Trump signed legislation Wednesday authorizing it, federal contractors aren’t in line for similar amends. A Washington Post analysis found that almost 10,000 companies hold contracts with federal agencies affected by the government shutdown, and the overall average value of their work is about $200 million a week.
Though his efforts won’t quite cover the loss of revenue Jafari expects from the stalled work, it will help lower the much higher overhead costs of carrying furloughed workers; he estimates a 15 percent annualized revenue shortfall from the shutdown. And it will prevent him from having to spend money and time replacing people in a highly competitive field were he to cut them loose: Affected workers include in-demand data analysts, cloud computing architects and program managers.
“I’m not trying to be generous. I’m trying to invest,” he said, adding, “I can’t overstress the very tight labor market. And it’s even tighter when you have to add in the clearances and other stipulations in this marketplace."
While more than 100 lawmakers have said they will refuse their salaries or donate their pay to charity during the shutdown, Jafari’s move isn’t common for business leaders who work as federal contractors, said Paul Light, a professor at New York University who studies the federal workforce. “It’s quite unusual — it’s rather patriotic almost — and it’s certainly a down payment on future grace,” he said.
Management experts said such actions could pay off with both current and future workforces. As the fundamental promise of working in government or government-related jobs gets tested following the longest shutdown on record, it could be much harder to retain or draw in people, especially those who have many options in the private sector.
Yet Jafari may be able to point to how, even if government contracts are more unpredictable, “we, as compared to competitors, look after you even if the government goes wacky,” said Peter Cappelli, a professor at the University of Pennsylvania’s Wharton School who studies human resources issues. “That’s how organizational culture gets passed on to people — it’s through stories and events.”
It also represents some level of shared sacrifice that experts say can help leaders manage in a crisis. “When people are miserable, they want their leaders to kind of be miserable, too,” said Thomas Kolditz, executive director of Rice University’s Doerr Institute for New Leaders. The aim is to reduce what psychologists call “social distance," even if leaders' lives remain very different from the people who work for them. ”They want to connect with them as humans."
Jafari said the affected contractors are spending their time working on new technology projects and business development areas. How he manages the company’s response is something he’s taking “week to week,” but “right now I’m committed to [not drawing a salary] until the end of the shutdown,” Jafari said. “So I’m in it for the long haul.”
He does say he has “fast-tracked” existing plans to do more work with commercial clients and has contracts in the pipeline that would diversify their business. “Obviously, we’d like to have a much better mix for the future,” he said.
And like most business leaders, Jafari wants to see a resolution — soon. “There’s got to be a better way than what both sides have been showing us to date,” he said. “Stalemates just don’t really work. There needs to be a compromise in one form or fashion or another. They have a duty, and neither side is doing their duty. They’re not doing their jobs.”
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