Squeezing Labor Costs Everywhere

The prevalence of low-wage jobs in the private sector and the scarcity of well-organized unions are among the explanations for America’s collapsing middle class. But the exploitation of cheap labor also extends into government jobs, as Bill Moyers and Michael Winship report.

By Bill Moyers and Michael Winship

And you thought the government didn’t have a jobs program. It does. The problem is that the pay and benefits are lousy, and in many cases the working conditions ain’t so great either.

We’re not talking about the civil service. No, as one of two recent reports notes, “Hundreds of billions of dollars in federal contracts, grants, loans, concession agreements and property leases go to private companies that pay low wages, provide few benefits, and offer employees little opportunity to work their way into the middle class. At the same time, many of these companies are providing their executives with exorbitant compensation.”

A Wal-Mart store. (Wikimedia Commons)

That’s from “Underwriting Bad Jobs,” an analysis written by Amy Traub and Robert Hiltonsmith at the public policy and advocacy group Demos. “Our tax dollars are fueling the low-wage economy and exacerbating inequality,” they note, whether it’s food vendors peddling hot dogs at the National Zoo in Washington, security guards at federal buildings or men and women sewing military uniforms in Kentucky.

Those impacted include healthcare, daycare and construction workers, armored car drivers, janitors and cleaners, prison guards at privately-run jails and gift shop cashiers at national parks, museums and monuments.

The Demos findings are echoed in a second report “Taking the Low Road: How the Federal Government Promotes Poverty-Wage Jobs through Its Contracting Practices” — issued just last week by the National Employment Law Project (NELP), a non-partisan nonprofit that focuses on issues affecting low wage and unemployed workers.

NELP reports that every year the federal government awards private companies half a trillion dollars for contracts for goods and services: “Privatization advocates tell the public that outsourcing government jobs to the private sector is good business and an efficient use of taxpayer dollars. Policymakers argue that when private firms compete for public contracts, market forces will prevail, and the government will get the goods and services it needs at the best possible prices.

“But in fact, this ‘free market’ system leads to a bookkeeping sleight-of-hand: Low-road contractors pay poverty level wages and provide no benefits for their employees, who then rely on food, housing, healthcare, and childcare subsidies from government agencies. Thus, the real costs of goods and services purchased under federal contracts are hidden, as are the thousands of workers who are trapped within this broken system.”

NELP conducted a survey of 567 of the workers and found that 74 percent earn less than$10 an hour. Only 26 percent got sick days and just 11 percent received employer-provided healthcare 58 percent report no benefits at all. One in five is falling back on Medicaid for health care and 14 percent say they depend on food stamps.

It’s not supposed to be like this. “These are employees working on behalf of America,” the Demos report notes, “doing jobs that we have decided are worthy of public funding — yet they’re being treated in a very un-American way.”

But as you know, virtually every low-wage worker in America is taking it in the neck, not just those with jobs outsourced by the Feds. Walmart — with revenues last year of nearly $470 billion dollars — is threatening to abandon plans to build three giant stores in Washington, because the city council insists they pay a living wage of $12.50 an hour.

Keep in mind that if adjusted for productivity, the federal minimum wage should be almost twice that amount.  But Walmart is in a tizzy over the Washington living-wage demands, despite the heirs of founder Sam Walton already socking away almost $116 billion. You have to ask, how much is enough when no matter what you have is never enough?

Which also brings us to McDonald’s. The fast food giant’s new CEO Don Thompson was just awarded a pay package of nearly $14 million. Perhaps that helps explain why McDonald’s has set up a website with the credit card company Visa to show its fulltime workers how to get by on the minimum wage it pays, which turns out to be a little over $1,100 a month.

All you have to do, they say, is get a second job, and not spend any money on food because presumably you can live on the crumbs from Don Thompson’s table. That’s a lot of leftover Chicken McNuggets.

Clearly, the owners of capital are determined to wring even greater wealth from the sweat and sacrifice of workers, deepening our spin into economic inequality until and unless, in solidarity, those workers stand up and demand a fair wage for a hard day’s work.

In Washington, some of them are standing up. On Thursday, July 18, federally subcontracted concessions workers at Union Station briefly walked off the job. It was the third such strike in eight weeks others took place at the Smithsonian and the Ronald Reagan Building organized by the Good Jobs Nation campaign that, according to the ThinkProgress website is “pressuring the government to stop paying poverty wages through its private-sector partners.”

The walkout at the Reagan building actually has triggered a Labor Department investigation into whether employers at the building’s food court owe their workers as much as a million dollars in back wages and damages.

It’s a tiny start. But there are two million federally subcontracted jobs out there nationwide and that’s more than McDonald’s and Walmart employ combined. And unlike the appalling situation for workers at those two consumer monoliths and others, President Obama could help solve the problem with a stroke of his pen by signing an executive order demanding a living wage for private employees working on government contracts.

Back in 2010, a year and a month after Barack Obama began his first term, The New York Times reported that the White House was “planning to use the government’s enormous buying power to prod private companies to improve wages and benefits for millions of workers.”

Mr. President, what’s holding you up?

Bill Moyers is managing editor and Michael Winship, senior writer at the policy and advocacy group Demos, is senior writer of the weekly public affairs program, Moyers & Company, airing on public television. Check local airtimes or comment at www.BillMoyers.com.


2 comments for “Squeezing Labor Costs Everywhere

  1. rosemerry
    July 23, 2013 at 16:22

    There is no excuse for this except a complete lack of care for the 99% by the POTUS and the “folks” associated with him.
    Prison work for corporations is another terrible blight on the USA’s reputation. Not only is is unfair and should be illegal, but it lowers pay and access to jobs for the low wage workers “lucky enough” not to be incarcerated. As Bill Moyers’ program on families informed us, one out of 8 Black breadwinners in Milwaukee is in prison. How do the rest manage, as jobs are removed and those remaining are paid almost nothing?
    GregPalast has written about John Paulsen and Lloyd Blankfein being rewarded for destroying the world financial system, while real workers have no recourse to the law which all are meant to respect.

  2. bobzz
    July 23, 2013 at 10:26

    Elsewhere, Moyers points out that American productivity has risen 95% since the 80s, but wages have only advanced 4%.

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