Tag Archives: poverty

There Are More Low Wage Federal Contract Employees than Walmart and McDonalds Combined #workforcedev

The Washington Post published a piece this morning on federal contract employees and their wages.

Study: U.S. taxpayers employ more low-wage workers than Wal-Mart, McDonald’s combined

While the story title would suggest that these workers were directly employed by the federal government, this is not the case, but the federal government has significant control over their employment conditions since it is contracted work.  The workers largely work for contracting companies – some prominent ones like Lockheed Martin and others more inconspicuous like the food service companies at national parks.  These contract workers also do unnoticed work like night time cleaning at federal buildings.  Other workers, like home health aids, are supported through Medicare and Medicaid spending.

Many of these types of jobs have been sourced through contracts rather than direct federal government employment because it helps manage benefit, health care, retirement, and vacation day costs for the government, but it means that over 2 million workers have seen their pay and benefits erode.

The argument in favor of lower wages that contractors pay is that these arrangements are the fair market wage for these workers (the Post quotes the American Enterprise Institute here).  Also, in a era of tight budgets and high national debt, this would represent an increased cost.

Demos, whose report identified the contract employment problem, estimates that increasing wages to reasonable “living wage” standards would increase contract costs by 10% on average.  This is a significant increase, but at the same time, one executive action could reduce the number of workers in tenuous work and living conditions incredibly quickly.  For reference, 2 million workers represents almost 10 percent of adults living in poverty (about half of all people living in poverty are children, who are dependent on their parents and guardians).

The possibility of increasing these workers wages is incredibly appealing because it is under the direct control of the government and it could reach millions of workers quickly.  Raising wages for these workers could make a big difference and deserves further consideration.