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The Shame of Underpaid Federal Contract Workers

Robert Hiltonsmith

Low-wage workers employed under federal concession and lease agreements went on strike at Union Station on Thursday, calling on President Obama to guarantee them a living wage and a voice on the job.

These concessionaires, many of whom earn too little to support their families, are not an outlier among the legions of private sector employees working on behalf of the federal government. In Demos’ recent study, “Underwriting Bad Jobs: How Our Tax Dollars Are Funding Low-Wage Work and Fueling Inequality,” Amy Traub and I identified nearly 2 million low-wage workers employed by private-sector firms receiving federal contracts, grants, concessions, and health care dollars. That’s 2 million people working on behalf of America, paid (at least in part) by our tax dollars, who are making $12 per hour or less.

Taking the Low Road,” a new report released today by the National Employment Law Project (NELP), sheds more light on the working conditions of these federal-supported low-wage workers, and its findings are disturbing. NELP surveyed 567 of these workers, including workers manufacturing military uniforms and service and retail employees in federal-owned buildings. They found that not only do these employees, the large majority of whom are women and minorities, work for low wages, but they receive nearly no benefits, and many must rely on some form of federal assistance to survive.

Eighty-six percent of the surveyed workers were Black or Latino, and 58 percent were women. Very few had benefits: 89 percent had no employer-sponsored health insurance, 79 percent had no paid vacation days, and 58 percent had no fringe benefits whatsoever. Seventy-four percent earned low wages ($12 per hour or less), which resulted in many workers finding it difficult to make ends meet: 56 percent reported trouble paying monthly bills, and 36 percent receive Medicaid and/or food stamps.

It is frankly appalling that Americans working in jobs supported by federal tax dollars, working on behalf of our country, are allowed to labor under such dismal conditions. Our government spends hundreds of billions of dollars each year in federal contracts, grants, loans, concession agreements, and property leases. These huge sums of money go to large, profitable corporations that pay their CEOs millions in salaries and bonuses but pay their workers such low wages that they are unable to afford basic necessities like food, clothing, and rent.

The federal government can and should fix this unfair arrangement. As Christine Owens, NELP’s executive director, put it, "When more than half of low-wage contracted workers struggle to pay their monthly bills, and nearly 40 percent depend on public assistance, it is time for the federal government to step up and once again act as a model for fair labor practices. And the President has the power to do just that with the stroke of his pen."