President Obama Should Raise Minimum Wage For Federal Contract Workers

Guess who is one of the biggest employers of minimum-wage employees? Your own federal government. After years of “privatization” and outsourcing, the government now contracts out a lot of work to companies that pay really, really low wages for jobs that when they were “government jobs” used to provide good pay and benefits. And this means that a lot of people – between 1 and 2 million – have to live in poverty. Now there are reports that President Obama is considering doing something about that.

An August, 2013 New York Times editorial, “The Government as a Low-Wage Employer,” explained the problem:

Recent studies have shown how hundreds of billions of dollars in federal contracts, grants, loans, concessions and property leases currently flow to companies that pay low wages and provide few if any benefits, even as executive pay among federal contractors has risen. In effect, tax dollars are being used to fuel the low-wage economy and, in the process, worsen inequality.

The links in that paragraph point to a National Employment Law Project (NELP) report, “Taking the Low Road: How the Federal Government Promotes Poverty-Wage Jobs Through its Contracting Practices, A Survey of Workers and Their Stories” and Demos study, “Underwriting Bad Jobs: How Our Tax Dollars Are Funding Low-Wage Work and Fueling Inequality.”

Greg Sargent reports in The Washington Post that President Obama is considering executive action to increase the minimum wage for employees of federal contractors. From “Obama weighing executive action on minimum wage?“:

Here’s some welcome news. At his meeting with Democratic Senators last night, President Obama indicated that he is giving serious consideration to executive action designed to raise the minimum wage for employees of federal contractors, according to one Senator who was present.

Proponents want to see this executive action happen on the merits — they believe it could impact as many as two million employees of federal contractors, and would help the economy. But they also believe such action could give a boost of momentum to the push for a minimum wage hike for all American workers, which obviously would require Congressional approval, but is currently facing Republican opposition.

The Congressional Progressive Caucus should get credit for pushing this. Government Executive had the story in December, in “Progressive Dems to Obama: Raise Minimum Wage for Federal Contractors“:

Progressive lawmakers have told President Obama he should unilaterally raise the minimum wage for federal contact employees, saying it would allow him to fulfill his promise of helping low-income earners without waiting for congressional action.

Despite Obama’s recent push to increase the minimum wage across the nation’s entire workforce, the fate of such a measure in Congress remains uncertain. Reps. Keith Ellison, D-Minn., and Raul Grijalva, D-Ariz., co-chairmen of the Congressional Progressive Caucus, wrote Obama a letter Dec. 4 telling him to take the “bold step” of issuing an executive order that would increase the wages for workers on federal contracts.

All told, Ellison and Grijalva said, the measure would affect more than 2 million employees.

The idea that government should shed good-paying jobs and then “contract out” the work was to “save money.” Never mind the effect on people’s lives, the gutting of the local tax base as people move from the middle class to poverty level, or the ripple effect on the economy as those jobs move down the ladder. Another way it doesn’t “save money” is that worker wages fall so low that the government has to pick up the slack with food stamps, Medicaid, and other government services. Along these lines, that Times editorial had one more good suggestion: “Mr. Obama also could tell federal agencies to conduct reviews of contracts to see if the work should be done in-house.”


This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary