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Marketplace

Do federal contractors save the government money?

Nancy Marshall-Genzer Jul 31, 2015
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Groups of federal contract workers have been walking off the job and holding protests every few months.  

It’s part of a campaign called Good Jobs Nation, backed by organized labor. It’s pushing for a $15 an hour minimum wage for federal contract workers and union representation. The most recent demonstration was in Washington, in late July.

Sontia Bailey is one of the government contract workers speaking out at the rallies.  She’s a cashier in a Senate cafeteria, working for a contractor hired by the government. It pays her $10.59 per hour.

Sontia Bailey

Sontia Bailey

I met her recently in a park down the hill from the Capitol.

“I’ve worked at the Capitol for two years and seven months,” she told me.

Bailey says her Capitol paycheck didn’t pay all of her bills. So, two years ago, she got a second job at Kentucky Fried Chicken. 

She says she had a miscarriage recently because she was working so much.

“I do, probably like 40 hours plus at the Capitol, then 30 plus hours at KFC,” she says. “So I really didn’t have time to rest, because I never had a day off.”

The government started replacing full-time federal workers with contract employees back in the ’80s, under the Reagan administration. The idea has had bipartisan support over the years and is part of initiatives to control government spending. 

Supporters of privatization say it does save the government money. Among them: Adrian Moore, vice president of the free-market Reason Foundation, says contractors are more efficient than the federal government.

“Contractors don’t use as many workers to do the same work,” he says. “They run with leaner workforces.”

But Moore also says contracting has to be done well to save money. Contractors have to be supervised.

Jeffrey Miron is an economist at Harvard and the libertarian Cato Institute. He says supervision is needed from the moment contractors submit bids to the federal government.

“The bidding process can be somewhat messy and complicated,” he says. “It can sometimes be rigged, it can sometimes be manipulated. So it’s not a completely fail-safe approach.”

That’s led to a backlash against privatization, and assertions that it doesn’t save the government money. Tara Young is an organizer with Good Jobs Nation. 

I met Young in the park with the Senate cashier, Sontia Bailey. Young says the contractor employees make so little, they end up on government programs for the poor. Bailey is on Medicaid.

“Workers are on Section 8, they use food stamps,” she says. “So we’re paying workers extra money, really, to help them with their low pay.”

Young says taxpayers get hit up twice: once to pay for the contract workers’ salaries and again to pay for government programs they need to get by. 

 

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