Improving Job Quality Through High-Road Contracting

September 6th, 2011 at 7:59 pm

A question I’m hearing a lot lately is: what can President Obama do on jobs that doesn’t require Congressional approval?

It’s a fair question in that Congressional approval will be…um…elusive, to put it politely.  But the answer is also elusive—Congress holds the purse strings and the set of ideas that could move the needle on unemployment without opening that purse is pretty much the null set.

That said, in reading this excellent oped by economist Paul Osterman, I was reminded of a good idea that could help improve the quality of jobs for millions of American workers: high-road contracting.

The federal government contracts out a tremendous amount of work, spending around half a trillion dollars per year on services and goods.  According to David Madland of the Center for American Progress, a very knowledgeable guy on this stuff, over 40% of those who do the work of the federal government are employed by private-sector businesses. 

The Obama administration has already taken action to ensure that firms’ tax and environmental records are taken into account when government procurement officers decide who gets the contract.  Why not also include how a firm treats its workers in making that decision?  That way, the feds can leverage their (i.e., our) contract dollars into higher quality jobs.

I’m not suggesting that federal contractors set some kind of a wage or benefit requirement.  In fact, by law, the federal procurement folks must consider “economy and efficiency” in contracting.  The thing is, it can be highly inefficient to contract with “low road” contractors (from CAP):

“…when companies can’t hold onto their employees because of extremely low wages and benefits, taxpayers often receive low-quality work and bear additional costs through programs such as Medicaid and the Earned Income Tax Credit—in effect providing a subsidy for low-road companies. A study of federal apparel contractors found that workers commonly had to supplement their meager incomes with government assistance. Each 100-person factory qualified for approximately $292,000 in public assistance annually.”

So, all I’m suggesting here is that when the feds procure services, they consider factors like vacancy rates, turnover, training commitments, and any other factors associated with a stable, productive workforce.  In doing so, we’d meet the efficiency criteria above while supporting higher quality jobs.

Like I said, this would boost job quality, not quantity, but there’s nothing wrong with that.  And, the President could make this happen through executive order.

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3 comments in reply to "Improving Job Quality Through High-Road Contracting"

  1. urban legend says:

    Anything that boosts middle class purchasing power is good for everyone else. (Conversely, anything that diminishes middle class purchasing power — think reducing Social Security benefits, state pension benefits, etc. — is profoundly stupid. That’s why the notion of “shared sacrifice” is absurd, unless it’s construed to mean, “It’s time the wealthy make their fair share of the sacrifice.” (I didn’t pick that up from the President.) 90-95% of Americans have been sacrificing for 30 years. Right now, on average, if they had been receiving their fair share of productivity growth, their income would be $10,000 higher. More than small change for over 100 million taxpayers.

    What’s been devastated has been the discretionary income that drives the economy.


  2. Rick McGahey says:

    Janice Nittoli, then at the Rockefeller Foundation, now heading the Century Foundation, put this idea forward in a New York Times op-ed this summer. Here’s the link:

    http://www.nytimes.com/2011/07/02/opinion/02nittoli.html


  3. David Kaib says:

    Glad to see people are finally paying more attention to this question. Here are more ideas about what the president can do right now. Any thoughts, Jared?

    American Prospect’s Special Report: Jobs Well Done – What the Obama Administration can do for American Workers Right Now: http://prospect.org/cs/archive/view_report?reportId=102

    Mike Elk, “Obama Has Power to Stop Unionbusting With a Stroke of His Pen” – http://inthesetimes.com/working/entry/7287/proposed_executive_order_shows_obama_has_power_to_stop_union_busting_w/

    Dean Baker on Right to Rent: http://www.cepr.net/index.php/component/option,com_issues/Itemid,22/issue,35/lang,en/task,view_issue/

    Center for American Progress’ report, The Power of the President: Recommendations to Advance Progressive Change
    http://www.americanprogress.org/issues/2010/11/executive_orders.html

    Dean Baker, The End of Loser Liberalism, Chapter 7, Fulcrums of Power II: The Treasury and the Dollar http://deanbaker.net/images/stories/documents/End-of-Loser-Liberalism.pdf


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