Few winners, many losers in shutdown

Posted at 9:43 AM on July 13, 2011 by Paul Tosto (0 Comments)
Filed under: Business

MPR's Martin Moylan has a look at the winners and losers so far during the first two weeks of the shutdown.

Read the story below or click on the play bar to hear it.

More than 20,000 laid-off state employees and thousands of Minnesotans going without a variety of state services clearly show who's losing in the state government shutdown. But are there any winners?

Some businesses in the state are hoping for a sales kick, including Pawn America. Company spokesman Michael Deering suspects his company and other retailers selling used goods may get a boost from the shutdown. Laid-off people still keep spending, he said.

"People really at a down time or when they're short on funds actually are looking for more for their money," Deering said. "They're still consumers. But typically they don't want to spend as much."

The shutdown also seems likely to generate a lot of legal disputes and court battles.

Ted Roberts is a lawyer with a firm that focuses on construction-related matters.

"In the short term it may result in more work for us," Roberts said. "The shutdown has resulted in a lot of construction projections stopping or halting. And most contractors when they bid projects, they're really depending and relying on a specified timeline. When that timeline is disrupted, you'll have consequences that just go down the chain."

And that chain may lead to court. But Roberts, who works with Fabyanske, Westra, Hart & Thomson of Minneapolis, said the outcome over the long term won't be good if clients end up going out of business because of the shutdown.

Some businesses know the shutdown is definitely bringing in more clientele.

Doris Palmer is one of the owners of Maple Springs Campground, a half-mile west of the Forestville/Mystery Cave State Park. She estimates to be getting 10 percent more campers at her park than usual.

"We filled last weekend completely," Palmer said. "Right after a holiday weekend, that's usually low. And now we're getting some through the week that we don't normally get." But Palmer is reluctant beneficiary. She wishes the nearby state park were open because the two operations collaborate.

It's not clear how many businesses are coming out ahead because of the shutdown. Augsburg College economist Ed Lotterman said they're out there.

"I think there are far fewer winners than there are losers," Lotterman said. "And the gains for the winners are not as much as the losses for the losers."

The most obvious potential winners are the private campgrounds and resorts and other businesses poised to replace a lost state service, Lotterman said, but it's impossible to estimate how much some parties might be coming out ahead.

Take Ross Freeman, for example, a manager at Hudson Liquor across the state line in Wisconsin. Freeman thinks he's seen an uptick at the store.

"Maybe a small amount from people crossing the border, mainly because Minnesota liquor stores are closed on Sunday," he said. "And I think some of the people were probably buying lottery tickets here instead of not being able to get them there."

The shutdown also means no Minnesota state lottery.

And that may point to the biggest and clearest winners in the Minnesota government shutdown. In the aggregate, lottery players are financial losers. In any given week, they typically part with millions of dollars overall.

But now they can't play. All bets are off.

A University of Minnesota psychology professor, Randy Stinchfield has extensively studied gambling. He doubts most lottery players are shedding dollars on other forms of gambling.

"They're probably holding on to that money they would have spent on the lottery, yeah," he said.

When the lottery does return, there could be a surge in betting as gamblers make up for lost wagering opportunities, Stinchfield said. But the longer the shutdown goes on, the better off they may be.


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