Contractors hit hard by government shutdown

Summary

---

Marketplace Morning Report — Contractors Hit Hard by Government Shutdown

Date: October 14, 2025
Host: David Brancaccio
Theme Overview:
This episode centers on the economic and workplace impact of the ongoing U.S. federal government shutdown, specifically highlighting the struggles of government contract workers who lack pay protections. It also covers the latest developments in U.S.–China trade tensions, new tariffs on lumber and furniture, and trends in mega-scale corporate mergers and acquisitions. The show wraps up with a note on Taylor Swift's latest business venture.

---

Key Discussion Points & Insights

1. Contract Workers Face Insecurity in Shutdown

• [01:01 – 02:43]
  • Host David Brancaccio sets the stage, noting, "Economic insecurity not just for federal employees these days, but think of all the contract workers."
  • Law & Policy: Federal employees get back pay via a law from Trump's first term—but the current administration claims it only applies to essential workers actually working without pay.
  • Government Contractors: Crucially, "millions of government contract workers have no pay guarantee" (Brancaccio, 01:32).
    • Megan McCarty Carino reports that contract workers outnumber federal employees 2:1 (01:44), driven largely by defense contracts but also including lower-wage service workers.
      • Notable: "Hundreds of thousands of lower wage service roles like janitors, cafeteria workers and security guards" are affected (Carino, 01:58).
  • Impact Example:
    • Interview with Julen Cosgrove, VP at Melwood (02:13), a nonprofit employing about 1,000 people at 70 federal sites, many of whom are disabled.
      • Many workers at Melwood face their first job or their first job in years and are already furloughed or working without pay. The organization hopes to backfill pay once the government reopens.
      • Quote: "A lot of people who work for us, this is their first job or their first job in a long time." (Nancy Marshall Genser quoting Cosgrove, 02:28)

2. Escalating U.S.–China Trade Tensions and Market Reaction

• [02:43 – 03:23]
  • Market Update: Brancaccio recaps the previous day’s upbeat stock performance after President Trump’s reassurance on China trade policy. However, new sanctions and tariffs, plus inflammatory remarks from Treasury Secretary Scott Besant, have souring effects.
    • Quote: "Treasury Secretary Scott Besant...slammed China, saying its economy is a mess and that Beijing, quote, 'wants to pull everyone else down with it.'" (Brancaccio, 02:55)
  • US stock futures are down sharply: S&P futures -1%, Nasdaq -1.4%. New tariffs kick in on lumber, furniture, and cabinets.

3. Details on New Tariffs Affecting Lumber and Furniture

• [03:23 – 04:23]
  • Nancy Marshall Genser:
    • 10% tariff on lumber; 25% tariffs on wooden furniture, vanities, and cabinets begin today.
    • On January 1, tariffs will rise again (furniture: 30%, vanities/cabinets: 50%) (03:40).
    • Canada, supplying 85% of US softwood lumber imports, will be hit hardest. Britain, the EU, and Japan face smaller rate caps.
    • Quote: "Canada will be hit especially hard by the new tariff, since it's already subject to other U.S. duties on its lumber." (Genser, 03:51)

4. Mega Mergers & Acquisitions – Why Big Deals Still Happen

• [05:24 – 08:09]
  • Justin Ho Reports: Though 2025 has seen the fewest mergers and acquisitions (M&A) in over a decade, the deals that do happen are especially large.
    • Smaller firms merge to expand products or lower costs, but big companies use M&A to solidify existing market dominance.
      • Drew Pascarella (Cornell): "Here you're sort of solidifying a leadership position as opposed to a small company using M and A to enter a new market." (06:03)
      • Big M&A is less risky—large, diversified companies can weather bad economies more effectively.
        • Quote: "They're not a single product company or a single geography company that could be wiped out." (Pascarella, 06:21)
    • Resource Control: Mega deals enable control over resources ("Is it people?...Is it copper?...Is it one of the four remaining railroad companies?" — Genser & Carino, 06:47–06:50) and supply chains, reducing exposure to global uncertainties.
    • Regulatory Scrutiny: Professor Afraaf Sharipur (UC Davis) notes that megadeals face tougher international regulatory scrutiny, but large companies have the legal firepower to navigate complex requirements (07:19–07:51).
      • Quote: "That scale and complexity...might actually favor very large strategic buyers that want to do mega deals." (Sharipur, 07:36)
    • Impact on Smaller Companies:
      • Quote: "If you're a mid-sized business and your largest competitors are 10, 15 times larger than you, your ability to compete is going to be really tough." (Sharipur, 07:58)
    • Big M&A activity is expected to continue in this climate.

5. Pop Culture Business: Taylor Swift’s New Move

• [08:16 – 08:48]
  • Brancaccio shares that Taylor Swift will release a six-episode Disney+ streaming series documenting her blockbuster Eras Tour.

---

Notable Quotes by Timestamp

• "Economic insecurity not just for federal employees these days, but think of all the contract workers."
  — David Brancaccio [01:01]
• "Millions of government contract workers have no pay guarantee."
  — David Brancaccio [01:32]
• "A lot of people who work for us, this is their first job or their first job in a long time."
  — Nancy Marshall Genser, quoting Julen Cosgrove [02:28]
• "Treasury Secretary Scott Besant...slammed China, saying its economy is a mess and that Beijing, quote, 'wants to pull everyone else down with it.'"
  — David Brancaccio [02:55]
• "Canada will be hit especially hard by the new tariff, since it's already subject to other U.S. duties on its lumber."
  — Nancy Marshall Genser [03:51]
• "Here you're sort of solidifying a leadership position as opposed to a small company using M and A to enter a new market."
  — Drew Pascarella [06:03]
• "They're not a single product company or a single geography company that could be wiped out."
  — Drew Pascarella [06:21]
• "If you're a mid-sized business and your largest competitors are 10, 15 times larger than you, your ability to compete is going to be really tough."
  — Afraaf Sharipur [07:58]

---

Important Segment Timestamps

• 01:01–02:43: Shutdown impact on contract workers
• 02:43–03:23: U.S.–China trade and stock market update
• 03:23–04:23: Details on new tariffs (lumber, furniture, and more)
• 05:24–08:09: Trends and rationale behind mega M&A deals
• 08:16–08:48: Taylor Swift’s Eras Tour to become a Disney+ series

---

Summary

This Marketplace Morning Report episode provides a rapid yet in-depth look at how the government shutdown is uniquely punishing millions of federal contract workers who lack legal protections for missed pay, drawing out personal stories and expert analysis. The show also delivers timely business news on U.S.–China trade escalation, new tariffs targeting Canadian and other imports, and a deeper dive into why huge mergers persist in a slow year for dealmaking. Finally, it notes Taylor Swift’s latest business expansion with a Disney streaming series.

For listeners pressed for time, these critical minutes offer both a human portrait of a headline story and actionable insights on what’s driving the business news cycle today.

Transcript

[Dell Commercial Voiceover]

Introducing your new Dell PC with the Intel Core Ultra processor. It helps you handle a lot, even when your holiday to do list gets to be a lot like organizing your holiday shopping and searching for great holiday deals and customer questions and customers requesting custom things. Plus planning the perfect holiday dinner for vegans, vegetarians, pescatarians and Uncle Mike's carnivore diet. Luckily, you can get a PC with all day battery life to help you get it all done. That's the power of a Dell PC with Intel inside, backed by Dell's price match guarantee. Get yours [e-mail] holiday terms and conditions apply. See dell.com for details.

[DSW Commercial Voiceover]

Shoe shopping should be fun and full of surprises. DSW has never ending options for every style, mood and occasion, all at really great prices. From sneakers to boots and everything in between, DSW makes it easy to discover the styles you love and maybe even a few you didn't expect. Whether you're shopping in store or online, you'll always find fresh looks at prices that make sense. Find the shoes that get you at prices that get your budget at DSW stores or dsw.com.

[David Brancaccio]

Economic insecurity not just for federal employees these days, but think of all the contract workers I'm David Brancaccio in Los Angeles. Good morning to you. It is day 14, entering a third week of the partial federal government shutdown for federal employees. The paychecks are grinding to a halt. A measure signed into law by President Trump in his first term entitles furloughed workers to back pay once the shutdown ends. That said, the current Trump administration has a theory that this law applies only to workers deemed essential who are actually working without pay. Now what is not contested millions of government contract workers who have no pay guarantee marketplaces Megan McCarty Carino reports contractors.

[Megan McCarty Carino]

Outnumber federal employees by about 2 to 1, according to analysis from Elaine Kmark at the Brookings Institution.

[DSW Commercial Voiceover]

In other words, there's been a boom.

[Marketplace Reporter/Analyst]

In contracting in recent years.

[Megan McCarty Carino]

Much of that is due to defense contracts for things like fighter jets. But there are also hundreds of thousands of lower wage service roles like janitors, cafeteria workers and security guards.

[Marketplace Reporter/Analyst]

There's a lot of uncertainty and a lot of anxiety.

[Megan McCarty Carino]

Julen Cosgrove is a VP at Melwood, a nonprofit that helps people with disabilities to get jobs in the D.C. metro area. The organization employs about 1,000 people at 70 different federal sites.

[Nancy Marshall Genser]

A lot of people who work for.

[Marketplace Reporter/Analyst]

Us, this is their first job or.

[Nancy Marshall Genser]

Their first job in a long time, cosgrove says.

[Megan McCarty Carino]

Some have already been furloughed Others are working without pay, though Melwood hopes to make them whole once the government reopens. I'm Megan McCarty Carino for Marketplace.

[David Brancaccio]

Yesterday President Trump said it'll all work out on China trade policy and the stock market went up today. China sanctioned the US Parts of a South Korean cargo company and then Treasury Secretary Scott Besant, speaking to the Financial Times Times slammed China, saying its economy is a mess and that Beijing, quote, wants to pull everyone else down with it. US Stock index futures are down hard S And P futures -1% Nasdaq futures -plus 1.4% Some new tariffs began as you slept. It affects lumber, manufactured furniture, kitchen cabinets, among other things. Marketplace's Nancy Marshall Gensler has more.

[Nancy Marshall Genser]

Starting today, there would be a new 10% tariff on lumber imports and 25% import taxes on wheat, wooden furniture, vanities and kitchen cabinets. On January 1, the furniture tariff rises to 30% and the vanity and cabinet tax increases to 50%. Around 85% of all US softwood lumber imports come from Canada, according to the national association of Homebuilders. Canada will be hit especially hard by the new tariff since it's already subject to other U.S. duties on its lumber. There are some carve outs for other countries. Duties on wood products from Britain will be capped at 10%, with a limit of 15% for the EU and Japan. I'm Nancy Marshall Genser for Marketplace.

[Dell Commercial Voiceover (Alternate)]

Introducing your new Dell PC. Powered by the Intel Core Ultra processor, it helps you handle a lot even when your holiday to do list gets to be a lot because it's built with an all day battery plus powerful AI features that help you do it all with ease, from editing images to drafting emails to summarizing large documents to multitasking. So you can organize your holiday shopping and make custom holiday decor and search for great holiday deals and respond to holiday requests and customer questions and customers requesting custom things. And plan the perfect holiday dinner for vegans, vegetarians, pescatarians and Uncle Mike's carnivore diet. Luckily you can get a PC that helps you do it all faster so that you can get it all done. That's the power of a Dell PC with Intel inside backed by Dell's Price match guarantee. Get yours [e-mail] deals, terms and conditions apply. See Dell.com for details.

[David Brancaccio]

Now to the Weddings section. You know the corporations all dressed up for marriage. The research company Deal Logic finds that January to September of this year we've seen the fewest mergers and acquisitions in more than a decade. But the the Corporate marriages that are happening are big, expensive affairs. Marketplace's Justin Ho has more on why we even track this.

[Justin Ho]

Smaller companies buy or merge with one another to sell more kinds of products. Sometimes they do it to expand geographically or to lower costs. Big M and A deals are different.

[Drew Pascarella]

Here. We're talking about companies that are already very well situated with respect to market presence.

[Justin Ho]

Drew Pascarella teaches finance at Cornell University.

[Drew Pascarella]

And here you're sort of solidifying a leadership position as opposed to a small company using M and A to enter a new market. For the first time.

[Justin Ho]

We're talking about deals with values higher than $10 billion. Pascarella says they're typically less risky than smaller deals because big companies tend to be more stable when the economy goes south.

[Drew Pascarella]

They're not a single product company or a single geography company that could be wiped out. And therefore, even in a volatile market that we continue to be in, they might feel a little bit more comfortable doing an M and A deal versus, say, a small.

[Justin Ho]

Getting even bigger can help companies insulate themselves from economic turmoil. Emily Feldman, a professor of management at the Wharton School, says big M and A deals can give companies more control over scarce resources.

[Nancy Marshall Genser]

Is it people? Is it their brains?

[Megan McCarty Carino]

Right?

[Nancy Marshall Genser]

Is it copper, like a natural resource? Is it one of the four remaining railroad companies in the United States?

[Justin Ho]

And if a company can control more of its own supply chains, you're less.

[Nancy Marshall Genser]

Subject to, you know, for example, what might be happening with suppliers or customers who might be impacted by some of the uncertainties that we've been talking about.

[Justin Ho]

Big M and A deals still have to pass muster with regulators. AfrafSharipur, a law professor at UC Davis, says megadeals often involve regulatory scrutiny.

[Marketplace Reporter/Analyst]

In several countries, these large megadeals are more subject to that, right, because those companies kind of hit multiple jurisdictions.

[Justin Ho]

But Fsharapur says big companies can afford the teams of lawyers and other advisors that it takes to jump through regulatory hoops all over the world.

[Marketplace Reporter/Analyst]

And that's why sort of that scale and complexity of the company might actually favor sort of the very large strategic buyers that want to do mega deals because they're also much more sophisticated in being able to manage regulatory complexity outside of one jurisdiction.

[Justin Ho]

Fsharipoor says this year's big mergers and acquisitions will have consequences for the smaller companies that aren't doing deals.

[Marketplace Reporter/Analyst]

You know, if you're a mid sized business in a particular sector and then your largest competitors are 10, 15 times larger than you, your ability to compete is going to be really tough.

[Justin Ho]

And big corporate deals fsharipour says are likely to keep happening. I'm Justin Ho. For Marketplace.

[David Brancaccio]

Multichannel tycoon Taylor Swift announced a streaming series coming to Disney. It documents her blockbuster eras tour six episodes, launching in December. Our producers are Tamara Fagan, Ashley Rodriguez, Ariana Rosas and Erica Soderstrom. Our senior producer is Alex Schroeder. Our supervising senior senior producer is Meredith Garretson. Morby In Los Angeles, I'm David Brancaccio. It's the Marketplace Morning report from APM American Public Media.

[Kimberly Adams]

I'm Kimberly Adams, host of Make Me Smart, a podcast from Marketplace that makes today make sense. Join me throughout the week as I dig into the biggest stories in tech culture and the economy. Whether it's a vibe check on the job market or the latest on China US Relations, Make Me Smart helps you understand how the headlines actually impact your daily life. Listen to Make Me Smart on your favorite podcast.

[Marketplace Reporter/Analyst]

Applause.