The automatic budget cuts known as sequestration are forcing thousands of federal workers in Massachusetts to take unpaid furloughs, curtailing services, cutting incomes, and stifling economic growth and job creation in the state, analysts say.
Employees are losing as much as 30 percent of their salaries to comply with a law aimed at reducing the federal deficit. They include engineers and civilian employees at the Army’s Natick laboratories, scores of Internal Revenue Service workers, and thousands of civilian employees at Hanscom Air Force Base, many of whom work on national security programs.
The furloughs are shrinking paychecks at a time when the lackluster economy needs consumers to spend. Job growth in Massachusetts has slowed significantly in recent months, and the state unemployment rate jumped to 7 percent in June, the highest since the end of 2011.
“There’s mounting evidence sequestration is having a real impact in terms of the state’s employment trajectory,” said Daniel Hodge, director of economic and public policy research at the University of Massachusetts Donahue Institute. “For some months ahead, maybe six months, it’s going to be hard for our economic recovery to turn into the type of true expansion we’ve all been hoping for.”
Sequestration has also sliced statewide housing programs for the poor, forcing some agencies to lay off staff.
The cuts are the result of Congress’s failure to reach a budget compromise earlier this year; the automatic cuts were supposed to be so dire they would push lawmakers in Washington into reaching a budget deal. That did not happen.
The cuts began to take effect in March, but only in recent months have they begun to be felt across Massachusetts, which receives more federal spending for defense and research programs than most states. Economists at the Donahue Institute project that sequestration will cost the state tens of thousands of jobs over the next several years.
An estimated 45,000 federal employees work in Massachusetts, according to the Labor Department. The Defense Department alone spends more than $500 million a year on wages and salaries for its 7,000 civilian workers here; furloughs will suck as much as $45 million in income from them and the state economy, according to a Senate Armed Services Committee report.
At Hansom Air Force Base, “Furlough Fridays” have turned the military post into a ghost town one day a week, complicating the base’s operations, some officials there say. During last week’s heat wave, said Colonel Lester A. Weilacher , the base commander, his attention was diverted by having to deal with a broken air conditioning system.
“I’ve been in the Air Force 23 years and I’ve never seen anything like this,” said Weilacher. “It’s been very stressful.”
Active duty military are exempt from the automatic cuts, but about 60 percent of Hanscom’s workforce, or about 2,000 people, are civilian employees who have had pay and hours cut. Marla Levenson, a 55-year-old military contracting officer and union local president, said a 20 percent pay cut has made it a struggle to pay her two sons’ college tuition. And with little to no discretionary income, she said, she can’t save like she used to.
Levenson served in the first Gulf War. She said she has always felt a calling to public service, but the pay cut is an unexpected sacrifice. “The personal reality is, it’s hard to deal with,” Levenson said. “There are needs to be met.”
Although sequestration was designed to cut across all federal agencies, some programs have been hurt more than others. For example, public defenders in the federal court system have had their budget cut by 10 percent and must take 14 furlough days before the federal budget year ends Sept. 30. Prosecutors at the US Attorney’s office, however, have not faced similar cuts because the Justice Department received permission from Congress to reprogram their budget to pay prosecutors’ salaries.
Miriam Conrad, a federal public defender who oversees the regional office, said the 12 federal public defenders operating in Massachusetts have stopped making court appearances on Fridays because of furloughs. Because of the legal right to an attorney, courts have had to hire private lawyers at $125 an hour to represent defendants on Fridays.
“It’s ridiculous,” Conrad said. “We’re facing these huge cuts that aren’t going to save any money.”
At the Army’s Soldier Systems Center in Natick, where the military develops new materials, food, and equipment to aid and protect soldiers, workers are taking one unpaid day off a week through the end of September.
Lynn Valcourt, an installation manager at the center, known as Natick Labs, estimates that furloughs have cut her gross pay by 30 percent. She has stopped contributing to her 401k retirement plan and downgraded to basic cable at home. Valcourt said some of her coworkers are parents with children in daycare who must reconsider whether they should continue to work and pay daycare costs that eat up shrunken earnings. Others are simply leaving, she said, taking early retirement or finding jobs in the private sector.
“A lot of the people at Natick are more skilled, they’re engineers and scientists who could be making much more in the private sector,’’ she said. “It’s a brain drain.”
Companies such as Mitre Corp. in Bedford, a nonprofit that works closely with Hanscom on key research and development programs, are also feeling the pinch. Mitre employs about 2,000 in Massachusetts. It laid off about 100 workers here in the spring due to sequestration, according to Peter Sherlock, senior vice president and director of Bedford operations. In recent months, Sherlock said, the reductions have forced the company to limit hiring and cut travel and discretionary spending.
“We saw that we are going to be facing increased uncertainty so we took some bigger measures,” Sherlock said. “That has a ripple effect in the rest of the local economy.”
Megan Woolhouse can be reached at mwoolhouse @globe.com.