Lifting Wages With Government Money.

As part of his effort to reform the way government contracts are rewarded, Obama plans to favor companies that offer higher wages and better benefits packages in government contracts, reports the New York Times. It would also reinstate controls started by Clinton and rolled back by Bush that prevent the government from doing business with companies that frequently violate regulations. Not surprisingly, the plan is drawing fire from business groups, who say it's an excuse to reward big labor and will hurt small businesses.

What's most astounding, though, is how this policy can have the effect of pushing wages up across the economy:

Because nearly one in four workers is employed by companies that have contracts with the federal government, administration officials see the plan as a way to shape social policy and lift more families into the middle class. It would affect contracts like those awarded to make Army uniforms, clean federal buildings and mow lawns at military bases.

John Podesta has said that 20 percent of employees from companies who contract from the federal government make poverty-level wages. In addition to pushing those workers into the middle class, or closer to it, the plan also acknowledges that what's good for workers is good for the economy. The article also cites a study showing that contractors who pay their employees well are more reliable and productive.

UPDATE: Kudos to Gautham Nagesh for breaking the story at the Daily Caller.

-- Monica Potts

You may also like