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Press release/statement

New Demos Report: Federal Government's $1.3 Trillion Purchasing Power Could Lift 8 Million Workers Out of Poverty

(New York, NY) – Eight million workers rely on low-wage jobs supported by the federal government’s $1.3 trillion in annual spending on goods and services, a new report by the national public policy organization Demos finds.

With a Congress that will not act to support American workers and their families, it is more important than ever that [the president] take executive action to institute a Good Jobs Policy. 

Underwriting Good Jobs: How to Place Over 20 Million Americans on a Pathway to the Middle Class Using Federal Purchasing Power builds on President Obama’s executive order that raised the minimum wage for hundreds of thousands of federally contracted workers, but calls for a more robust framework that would incentivize federally-funded employers to raise labor standards more broadly, benefiting 8 million low-wage workers and their families. 70% of these workers, or 5.6 million, are women, and nearly 45% are people of color.

“Taxpayers are spending as much as $7.65 billion a year to finance excessive executive pay in federal contracts,” said Robert Hiltonsmith, Policy Analyst and co-author of the report. “Since 2009, 95 percent of national income growth has gone to households in the top one percent, while wages have continued to remain stagnant and the income gap has widened. Productivity gains have been cut from workers’ wages as our workforce continues to produce more for less, effectively benefiting only those few at the top.”

Key findings from the report include:

  • At least 8 million workers and 21 million people rely on low-wage jobs in the federally-supported economy
  • Raising these low wages will stimulate additional GDP growth of about $31 billion annually and lead to the creation of 260,000 new jobs
  • The implementation of a Good Jobs Executive Order will result annually in an additional $6.8 billion in new tax revenue and nearly $9 billion in fiscal savings from public assistance programs

“The president took the first important step to reducing inequality in our federally-supported workforce,” said Lew Daly, Director of Policy and Research and co-author of the report. “But with a Congress that will not act to support American workers and their families, it is more important than ever that he take executive action to institute a Good Jobs Policy. ” 

The Good Jobs Executive Order advocated in the report would apply to the entire workforce of federally-supported employers and would significantly benefit women and minorities – who make up a large percentage of low-wage workers in the federal purchasing footprint. It builds on state and local precedents, advocating for spending agencies to incorporate higher workforce standards when evaluating and awarding federal contracts. These standards should include collective bargaining rights, living wages and good benefits, compliance with workplace protection laws and other applicable business regulations, and limits on excessive executive compensation.

“An investigative report released by HELP Committee majority staff in 2013 revealed widespread labor law violations among many major government contractors,” said Senator Tom Harkin, who chairs the Senate Health, Education, Labor, and Pensions Committee. “Improving our federal contracting policy by ensuring compliance with basic workplace protection laws, including those that govern wage and hour regulations as well as health and safety standards, would be a welcome step forward and one that would improve the standard of living for millions of Americans.”

Underwriting Good Jobs is the third report in Demos’ federal contracting series that reveals how the taxpayer-funded federal contracting system contributes to growing income inequality.