Echoing a policy first implemented here in Maryland, President Obama is considering taking the "high road" to improve wages for government contracted workers. The High Road Contracting Policy would favor companies that have proven labor records when doling out federal contracts.
Union leaders are rejoicing at the prospect, as they have long argued that jobs financed by government contracting pay low wages and offer limited benefits — if any at all. According to the Economic Policy Institute, 20 percent of federal contract workers earn below the "living wage" of $9.91 an hour.
Proponents point to the hidden costs associated with loose labor standards — costs that are eventually passed on to taxpayers. Since many of the companies with government contracts pay their employees below poverty-level wages, those employees are often forced onto government entitlement programs like Food Stamps and Medicaid.
Critics of the legislation, such as the U.S. Chamber of Commerce, claim the proposal is a government handout to the unions that helped move Obama into 1600 Pennsylvania Avenue.
As far as the numbers go, we've seen some substantial results here in Maryland. Since the policy was implemented in 2007, the average number of contract bids jumped 30 percent. At least half of those companies noted that the new labor standards "leveled the playing field" and encouraged them to bring jobs to Maryland for the first time.
Companies paying a living wage right now are working against the odds to try and compete; "low-road" companies are often able to outbid based on the money they save by skimping on payroll and benefits.
As one current Maryland contractor explained: "... the bids are a race to the bottom. That's not the relationship that we want to have with our employees. The living wage puts all bidders on the same footing."
Additional research from the Center for American Progress concluded that when contractors cut corners with worker's pay and benefits, they are far more likely to cut corners with their actual work performance.
The National Employment Law Project found that "better paid workforces typically enjoy decreased employee turnover (with corresponding savings in re-staffing costs), increased productivity, and improvements in the quality and reliability of the services that they provide."
The High Road policy would also implement a new system to track contract bidders with a history of labor and employment violations.
Contractors with workplace violations were up to five times more likely to score poorly in performance ratings then the "high-road" contractors, according to a recent study of New York City construction contractors.
The bottom line is better paid workers perform better in their duties.
Let's hope that if Obama's proposal is implemented at the federal level, the "high road" will lead to prosperity and dignity for low wage workers all across the United States.
Be Well,
Jimmy
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