Federal Contracts Send Billions Of Dollars To CEOs But Pay Workers A Poverty Wage

September 25, 2013 | | Think Progress |

The contracting practices that make the federal government the largest low-wage employer in the country are also paying top corporate executives nearly $24 billion per year according to new research from the think tank Demos. If contracting policies were reformed to cap the taxpayer contribution to executive pay at the salary of the U.S. Vice President, the think tank estimates that full-time workers paid by the contracts could see their annual pay increase by almost $14,000 at no additional cost to taxpayers.

Demos pulls from a Government Accountability Office finding “that taxpayers subsidize more than $760,000 per year toward the compensation of contracting executives who often earn millions of dollars annually.” That’s more than half a million dollars above what the Vice President is paid. Working from the GAO figures, Demos reports that between $20.8 and $23.9 billion each year goes to executive pay at the companies that contract with the government. Recouping the roughly $7 billion of that total that goes to pay exceeding the Vice Presidential salary mark would free up enough taxpayer money to raise wages at those companies by up to $6.69 per hour, or $13,902 per year for a full-time employee.

Those workers struggle to live on their current wages. Janitorial workers, fast food workers, and retail service workers at federal buildings in D.C. have gone on strike three times in recent months to agitate for better pay and more consistent schedules. ThinkProgress spoke to several striking workers whostruggle with education and health care costs while working for less than $9 an hour at Washington, D.C.’s Union Station. Previous research from Demos found that government contracts support almost two million low-wage jobs – more than Walmart and McDonalds combined.