Forty Percent of Federal Contract Dollars Go To Worker Wage, Safety and Health Violaters

Some 40 percent of federal contracting dollars go to firms that break worker safety, health and wage laws, a new report says. The companies’ violations of minimum wage laws alone cost workers an estimated $1.6 billion to $2.5 billion yearly, it adds.

Drawing on federal data, the report from the think tank Demos says such widespread abuse argues for keeping Democratic President Barack Obama’s Fair Play and Safe Work-places executive order in place after the GOP Trump administration takes office on Jan. 20.

Whether Trump and his incoming officials will listen is another matter. The president-elect has vowed to roll back what he calls “illegal” Obama executive orders, without specifying which ones. A check of both the GOP platform and a list of 282 Trump promises, compiled by the Washington Post, discloses no specific mention of that Obama fair pay order.

Nevertheless the threat of a rollback led supporters of fair pay and safe worksites for the contract workers hit the streets on Dec. 7 in downtown D.C., backed by Sen. Bernie Sanders, Ind-Vt., Rep. Keith Ellison, DFL-Minn., and Good Jobs First, a labor-supported think tank.

They said if Trump can use federal contracting leverage to push Carrier, a division of United Technologies – a prime military contractor – into saving hundreds of jobs in Indianapolis from moving to Mexico, he can use the same leverage to insure employees of contractors, such as fast food workers in federal food courts, get decent pay and working conditions.

“In a September speech, Mr. Trump declared that in his administration, ‘Every policy decision we make must pass a simple test: Does it create more jobs and better wages for Americans?’” the groups said before the rally. 

“As the next CEO of America, Mr. Trump can turn his promise into policy.  In his first 100 days in the Oval Office, Mr. Trump should sign an executive order to make sure the $1.3 trillion in taxpayer dollars our government spends annually rewards corporations that invest in ‘model employers’ that create good union jobs in America.”

That’s not what the government funds now, they added. Federal contracts, loans and grants to account for two million poverty-level jobs funded by taxpayer money. “This is more than the number of low-wage workers at Walmart and McDonalds combined,” they noted.  

The report makes the same “leverage” argument that Trump may have used on Carrier.

“Donald Trump campaigned as the champion of working-class Americans facing a system of crony capitalism supported by the federal government,” analyst Amy Traub wrote for Demos. “There is no better example than the corporations that cheat their employees out of pay and maintain dangerous work sites, yet still retain lucrative contracts with the federal government and even have their contracts renewed.

 “This is why President Obama’s Fair Pay and Safe Workplace Executive Order must be implemented under the new administration. The order, which is currently facing a legal challenge from the contractor lobby, would crack down on federal contractors that persistently abuse working Americans.”

Traub notes firms receiving federal contracts employ 20 percent of all U.S. workers, thus giving the government “far-reaching” leverage to influence their behavior. “By establishing a mechanism to encourage contractors to comply with workplace protections, and denying them contracts if they persistently refuse to follow the law, the Fair Pay and Safe Workplaces Executive Order is a critical tool to fight workplace violations,” she says.

Recent cases make the same point. In October, for example, the Labor Department’s Office of Federal Contract Compliance Programs pushed Tyson Foods – one of the nation’s largest food processors and a federal contractor – into a compliance agreement covering six Tyson plants in Arkansas, Texas and New Mexico.

The agency found Tyson guilty of discrimination in hiring against at least 5,900 applicants, most of them minorities, although in one plant Tyson discriminated in favor of Asian-Americans at the expense of everybody else. OFCCP ordered Tyson to pay the hurt workers $1.58 million in back pay and damages. 

The problem goes beyond just Tyson, Traub’s report for Demos shows.

“Between 1999 and 2013, contractors were fined nearly $722 million for serious violations of health, safety, and employment laws, accounting for 12 percent of all such fines. Approximately 40 percent of all federal contracting dollars in 2013, a total of $175 billion, went to contractors with health, safety or wage violations on their record,” she reports.

A prior Government Accountability Office investigation “discovered that among the 50 companies receiving the largest penalties for violations of wage and hour laws between 2005 and 2009, half were federal contractors,” Traub noted.

“Federal contractors were also among the companies facing the largest penalties for health and safety violations. Yet the GAO concluded none of these noncompliant companies had been debarred or suspended from federal contracts as a result of their workplace abuses.    

“From the 674 food service workers at the U.S. Capitol who were cheated out of more than a million dollars in overtime pay and other wages by the private companies running congressional cafeterias, to the two Mississippi shipbuilding workers who were killed in a ‘horrific and preventable situation’ when flammable materials exploded in an improperly ventilated workspace, workplace violations have concrete and sometimes devastating consequences in the lives of working people, their families, and communities,” the report says. 

Obama’s executive order “is a powerful tool for bringing contractors into compliance with worker protection laws and ensuring that those who flagrantly and repeatedly abuse their employees no longer receive federal contracts,” Traub’s report concludes.  

Posted In: Allied Approaches