The Case For Making Federal Contract Jobs Good Jobs

Derek Pugh

Right now taxpayer dollars are not only being used to subsidize, but also expand, the low-wage economy on a massive scale. President Obama could sign an executive order today that would help halt wage theft and place over 20 million Americans on a pathway to the middle class, finds new research conducted by the think tank Demos.

The report, titled “Underwriting Good Jobs,” reveals the underbelly of our federal contracting system and how it exacerbates income inequality. Raising the wages and workforce standards for what the authors call the “federally supported workforce” would boost the economy, create jobs and reduce the deficit:

  • At least 21 million people—8 million workers and their families—rely on low-wage jobs in the federally supported economy, that is, jobs with firms that receive a significant portion of their revenue from federal funds.
  • With robust action to raise workforce standards in the federal footprint, more than 8 million lower-wage households and 20 million people will see at least a 20 percent increase in their living standards.
  • Gains for these workers and their families will pay additional dividends in terms of growth, employment, and fiscal returns—we will see additional GDP growth of about $31 billion annually, along more than 260,000 additional jobs; $6.8 billion in new tax revenue and nearly $9 billion in reduced costs in nutrition assistance, earned income tax credit and Medicaid programs can be expected annually.
  • Higher workforce standards in the federal footprint could also help to raise workforce standards in the broader economy, particularly through competition effects within sectors but also by signaling that raising workforce standards is a national priority.

Using our more than $1.3 trillion in federal purchasing power to support private employers while not providing adequate wages to millions is bad for the economy and working families. But there’s an alternative to this madness.

The report calls on the president to issue a “Good Jobs Executive Order” directing key spending agencies to encourage federally funded employers to raise their labor standards by:

  • Respecting employees’ right to bargain collectively with their employers, without being forced to take strike action to win better wages and conditions.

  • Offering living wages and decent benefits, including health care and paid leave for sickness and caregiving, as well as fair work schedules that are predictable and stable.

  • Demonstrating an exemplary standard of compliance with workplace protection laws, including laws governing wages and hours, health and safety, and other applicable business regulations.

  • Limiting executive compensation to 50 times the median salary paid to the company’s workers; in addition, the current cap on federal contract funds applicable for executive salaries should be substantially reduced.

This is as much an issue of human rights as it is an issue of fairness and equal opportunity. Workers deserve to be paid their fair share of what they produce and should not be forced to work in unsafe conditions. They deserve the right to have accessible and affordable health care options and should not be forced to choose between a sick child and their job. And with more than 70 percent of the federally-supported workforce being women, and nearly 45 percent people of color, those who were hit the hardest in the wake of the great recession are disproportionately affected. That also makes the federal government the largest funder of low-wage employment for working women and minorities. This is a national disgrace.

The federal government should be a model employer, not a hypocritical one that propagates the notion that in capitalistic America we must choose between workers’ rights and job creation. Time and time again research has proven this to be wrong. In this case, an executive order would actually create more than 260,000 jobs. A Good Jobs Policy for federal purchasing would greatly reduce gender and racial income inequalities to help get our country back on the right track.

With Congress immobile, wages stagnant, and the American middle class still fighting to recover from the ‘recovery,’ the president has deemed 2014 a “year of action” on inequality. His first step was to issue an executive order raising the minimum wage for federal contractor wages to $10.10 — but that’s just a first step.

The next step President Obama should take to practice what he preaches on equal pay for equal work, limiting excessive CEO pay and defending workers’ right to bargain collectively is to sign a Good Jobs Executive Order.

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