Federal Contracts Send Billions Of Dollars To CEOs But Pay Workers A Poverty Wage

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ceopayThe contracting practices that make the federal government the largest low-wage employer in the country are also paying top corporate executives nearly $24 billion per year according to new research from the think tank Demos. If contracting policies were reformed to cap the taxpayer contribution to executive pay at the salary of the U.S. Vice President, the think tank estimates that full-time workers paid by the contracts could see their annual pay increase by almost $14,000 at no additional cost to taxpayers.

Demos pulls from a Government Accountability Office finding “that taxpayers subsidize more than $760,000 per year toward the compensation of contracting executives who often earn millions of dollars annually.” That’s more than half a million dollars above what the Vice President is paid. Working from the GAO figures, Demos reports that between $20.8 and $23.9 billion each year goes to executive pay at the companies that contract with the government. Recouping the roughly $7 billion of that total that goes to pay exceeding the Vice Presidential salary mark would free up enough taxpayer money to raise wages at those companies by up to $6.69 per hour, or $13,902 per year for a full-time employee.

Those workers struggle to live on their current wages. Janitorial workers, fast food workers, and retail service workers at federal buildings in D.C. have gone on strike three times in recent months to agitate for better pay and more consistent schedules. ThinkProgress spoke to several striking workers who struggle with education and health care costs while working for less than $9 an hour at Washington, D.C.’s Union Station. Previous research from Demos found that government contracts support almost two million low-wage jobsmore than Walmart and McDonalds combined.

Fast food and retail worker strikes around the country have raised the pressure on lawmakers to enact a higher federal minimum wage, but legislative progress on the matter will be difficult with conservative opponents of wage laws in control of half of Congress. Federal contracting practices are another matter. President Obama could change the rules governing federal contracts through executive action, which 17 members of the Congressional Progressive Caucus urged him to do in a July letter.

The ratio of executive pay to worker pay has skyrocketed in recent decades, hitting 273-to-1 in the most recent data. Meanwhile, the minimum wage is worth less than in 1979.