Federal Contract Jobs Leave One in Five in Poverty
From the Economic Policy Institute (EPI), a nonpartisan think tank
Click here to access this Economic Snapshot on EPI’s website with references.
Click here to download EPI’s report, Outsourcing Poverty: Federal Contracting Pushes Down Wages and Benefits (Adobe Acrobat required.)
Kathryn Edwards
Economic Policy Institute
The federal contract workforce—government workers paid with federal dollars but employed by private business—is swelling in size. Although the number of directly employed federal workers has remained steady at 2.7 million since 2000, federal contract workers have grown from 1.4 million to 2.0 million.The cause for this increase is the federal government’s expanded outsourcing of its operations. Federal contract spending—the money federal agencies pay to private businesses for goods and services—has increased 69% (to $415 billion) between FY 2000 and FY 2006 (the last year of available data). This spending on outsourcing constituted 16% of all federal outlays.
This is a troubling development. An estimated 20% of federal contract workers make a wage below the poverty threshold. In addition, these workers are less likely to have some form of health care or retirement benefits. In short, the United States essentially has two federal workforces: one to which the government is accountable, and one to which it is not.
Contracting is done under the mantra of greater efficiency, but much of this “cost-saving” comes from the willingness and ability of private contractors to push down wages and benefits. In short, the government is spending more money than ever that encourages lower wage jobs.
