Victor Juhasz
This story is part of the Prospect’s series on how the next president can make progress without new legislation. Read all of our Day One Agenda articles here.
With Senate control uncertain, it’s also far from certain whether President-elect Biden will be able to accomplish key priorities to improve the lives of working people that require Senate approval, such as large fiscal stimulus measures to boost the economy. And even if Democrats win control of the Senate, they will not have the filibuster-proof majority currently required to pass reform measures that cannot be passed through budget reconciliation—measures like raising the federal minimum wage to $15 and reforming labor law so that workers who want to join a union are able to do so.
But there is plenty that President Biden can do to support working people that doesn’t require Congress. One key area is the federal contracting system. While the president cannot—without Congress—increase the federal minimum wage, the president can, through executive power, increase the minimum wage of workers on federal contracts.
The impact would be substantial. Every year, the federal government spends hundreds of billions of dollars on contracts. Workers on those contracts (and subcontracts) do everything from building interstate highways to answering questions on COVID-19 safety measures at CDC call centers to cleaning federal buildings to caring for veterans receiving VA benefits to serving concessions at national parks. While the precise number of workers on federal contracts is unknown, estimates put the number at around five million.
The current federal contracting system leaves many of these contract workers facing low wages and poor working conditions. The contracting system prioritizes low prices for contracts for routine services in which labor costs make up the majority of the cost of the contract. This provides an incentive for contractors to cut corners with respect to worker pay and workplace safety.
Unsurprisingly, federal contractors have frequently been caught violating wage and hour laws and workplace health and safety standards, stealing workers’ wages and putting their safety at risk. This “race to the bottom” also puts responsible contractors at a competitive disadvantage. The Biden administration should use its executive and regulatory authority to improve the wages and working conditions of millions of workers on federal contracts.
Some actions of the Trump administration related to workers on federal contracts need to be immediately rescinded, such as the executive order that bans federal contractors from providing worker training on the impacts of systemic racism. But the Biden administration should not just aim to restore the state of the world as it was when President Trump took office.
The minimum wage is a good example. The Obama administration published a rule in 2014 that increased the minimum wage for federal contractors to $10.10 and provided for automatic updating every year; on January 1, 2021, it is set to increase to $10.95. But the social and political context around the minimum wage has changed substantially since that rule was first conceived—including the fact that there is no longer any hint of a consensus among economists that a minimum wage of $15 would cause meaningful job loss among low-wage workers. President Biden should increase the minimum wage for workers on federal contracts and subcontracts to $15 immediately, and eliminate all subminimum wages for tipped workers, youth workers, and workers with disabilities.
Similarly, the Obama administration published a rule that provides seven days of paid sick leave each year for workers on federal contracts. The COVID crisis has highlighted the crucial need for paid time off for workers. The steps taken under the Obama administration should be expanded to include not just paid sick leave, but also seven days of paid family and medical leave and seven days of paid vacation.
The Biden administration should also require agencies to strengthen their bidder evaluation processes. In particular, the process should incorporate a price realism analysis, which is a determination of whether a bid is unrealistically low for what the bid proposes to do. In essence, this analysis would establish whether a bid is “too good to be true” and would result in workers on the contract bearing the brunt of unrealistically low prices by receiving too little pay or poor working conditions. It would help ensure that contract awards go only to bids that are based on realistic labor costs.
One issue with enforcing standards for workers on federal contracts is the lack of good data about these workers (as noted above, we do not even know the precise number of workers on federal contracts). As a result, a key part of improving the pay and working conditions for workers on federal contracts is for the Biden administration to issue an executive order directing agencies to collect high-quality data on the federally contracted (and subcontracted) workforce, including numbers, demographics, pay, and location. Further, rickety IT systems must be improved across agencies to track this workforce and enforcement activities.
All of these activities—and more—should be coordinated through a new White House Office of “Purchasing for the Common Good.” This office should also place compliance officers that prioritize labor issues at each contracting agency to coordinate and effectively implement the programs. This office would help drive institutional changes in federal contracting, ultimately leveraging the hundreds of billions of dollars of taxpayer money spent each year by the federal government on contracts and subcontracts to improve the pay and working conditions of a large swath of the U.S. workforce.
