US Capitol of inequality

The federal government is a major culprit behind gaping income gaps in Washington DC, thanks to its contracting process. About one-third of jobs on federal contracts in DC pay less than a family living wage, in a city that is one of the most expensive and most unequal in the country. In fact, the number of workers in the city performing federal contract work at less than a living wage is larger than the entire workforce of the DC region’s largest private employer, Northrop Grumman.

It doesn’t have to be that way. President Obama could act today to change contracting rules to give a preference to companies that offer all their workers an adequate living wage and decent benefits.

{mosads}At $532,000 a year, the average income of DC’s richest five percent is higher than that of any other major U.S city. Meanwhile, the bottom 20 percent of Washington families scrape by on $9,900.  The earnings gulf between higher and less educated workers has reached its widest extent in 35 years.

Federal contracting is helping drive these forces as the largest purchaser of goods and services, in industries ranging from janitorial services to software design. Almost 30 percent of these jobs – or 24,500 – pay less than $20 an hour, the family living wage for a family of four, based on research done by the DC Fiscal Policy Institute in partnership with the advocacy group Good Jobs Nation.  

In occupations like building services, food service and healthcare support, over 80 percent of the federal contract jobs in the city pay below a living wage.  The median wage for food-service workers is only $10.82 per hour.

Meanwhile, over 12,000 federal contracting jobs in DC – in occupations such as management, legal services and IT – pay over $120,000 a year, placing them in the top 20 percent of the District’s earners.

Food-service workers at the U.S. Capitol illustrate the impact of federal contracting on income inequality. The Senate Dining Room – the full-service restaurant open only to senators and their guests – used to be staffed by direct federal employees who received decent wages, regular pay increases, and full healthcare and retirement benefits. But in 2008 Senate food service was outsourced to a private corporation which reduced pay rates for new hires by 40 percent, to just over $10 per hour.  

The story of Charles Gladden, a 63-year-old Senate cafeteria worker who sleeps on the streets of DC, received national media attention this year, but his plight was less surprising to advocates for the city’s working poor. Simply put, when many jobs pay less than a living wage, some workers will not be able to afford to live – whether they work at a neighborhood fast-food outlet, or serving our nation’s elected leaders.

Fortunately, there is something that can be done to immediately lift contract workers like Charles Gladden out of poverty, in DC and across the nation. Obama, or his successor, could use his executive power over federal procurement to create good jobs for contract workers.  

Last year, the president made the first move in this direction when he raised the minimum wage for federal contract workers to $10.10. This was a good first step, but it is not enough, particularly in high-cost cities like Washington DC.  Starting this month, in fact, that wage level is less than DC’s minimum wage.

The president should build upon this momentum by issuing an executive order that would give a preference in contract awards to companies that offer all their workers an adequate living wage and decent benefits.

By using its buying power to create good jobs, the federal government would set a standard for states, cities, and private employers to follow and help realize the President’s goal of ensuring that “nobody who works full-time should ever have to raise a family in poverty.” This is the right thing to do for the country, and it the right thing to do for the people who live and work in the government’s own backyard.

Lazere is executive director of the DC Fiscal Policy Institute.