How Your Tax Dollars Fund Bad, Low-Wage Jobs and Help Fuel Inequality


The vacuous, cheerful expression of the Walmart smiley face has long been associated with the paradoxically dark reality of low-wage work. With the recent fast-food worker walkouts in New York, the golden arches may go down, too, in the annals of class-war symbology. But a report released Wednesday by the public policy organization Demos, reveals that there is one employer responsible for creating more low-wage jobs than Walmart and McDonald’s combined: Us.

According to "Underwriting Bad Jobs: How Our Tax Dollars are Funding Low-Wage Work and Fueling Inequality," taxpayers subsidize nearly 2 million low-wage jobs through federal contracts, Medicare and Medicaid spending, Small Business Administration loans, federal infrastructure funds, and other areas of government spending.

Low-wage workers in these sectors include apparel manufacturers, construction laborers, retail workers, security guards, janitors, and home health aides, to name a few. The vast majority of these workers are paid less than $12 per hour, and depending on the sector, wages are often much lower than that. The struggle to live and raise families on low wages is made even more difficult by the lack of benefits and job security that are typically part and parcel of these jobs.

Home health aide, for example, is among the fastest growing occupations in the country. By 2020, home health aide and personal care aide jobs are expected to grow by 70% to employ 3.2 million Americans. Despite the demand for the important services home health workers provide in caring for the sick, elderly and disabled, the median wage for home health aides is $9.82 per hour. According to the Demos study, two thirds of the home health industry is supported by tax dollars funding Medicare and Medicaid.

However, not all federally funded jobs are underpaid. The report explains that while the government limits the amount of federal funding that contracting executives can receive, the cap is indexed to the compensation levels of private sector executives. So, as CEOs in the private sector have seen their incomes skyrocket, the maximum compensation for a federally contracted executive has risen to over $700,000.

Amy Traub, one of the authors of "Underwriting Bad Jobs," says the American people have a responsibility to ensure that their tax dollars do not exacerbate economic disparity.

“We don’t usually think of the federal government as a low-wage employer. In the economy as a whole, we know there is a lot of low-wage work. You look at Walmart and McDonald’s and the workers who are standing up and demanding something better, and they deserve something better. But when it’s people working on behalf of America, we’re all responsible for that.”

A campaign called Good Jobs Nation will give Americans an opportunity to embrace that responsibility by supporting workers with federally subsidized jobs who are uniting to demand living wages, benefits and better working conditions. The campaign went public in conjunction with the Demos report at a press conference in Union Station, a federal building in Washington DC.

Lucila Ramirez is usually mopping floors and taking out the trash at Union Station, working hard to ensure the historic building is clean and beautiful for the hundreds of tourists and DC residents who pass through it every day. Today, however, she stood at a podium to tell her story in the posh Columbus Club in the east wing of the building.

Ramirez has worked for a company contracted by the federal government to clean Union Station for 21 years. In 2012, nearly $2 billion in federal contracts went to companies providing property services for federal buildings. But after two decades of working hard for her company, Ramirez makes only $8.75 per hour and has no benefits. She has to rent rooms in her home to strangers to cover the mortgage, and at 55, is worried about when she will be able to retire.

“I have never asked for government assistance,” she said. “But today I am asking President Obama on behalf of all Union Station workers to be a good landlord and order federal contractors to pay good wages and benefits.”

"Underwriting Bad Jobs" asserts that the President has the power to sign an executive order requiring all companies that do business with the federal government to pay living wages and raise workplace standards. Throughout the press conference, workers from a variety of sectors that contract with the government implored President Obama to take action.

Four truck drivers from South Carolina traveled to DC for the event, and took a turn at the podium. One driver introduced himself as Tony German and explained that they haul loads for a ship liner that has received $6 billion in federal contracts over the past decade to transport military supplies. The truck drivers, however, have seen little of that wealth. Approaching retirement age with no health insurance, a salary that hasn’t increased from $36,000 in 13 years, and the out-of-pocket costs of tires, fuel and insurance for the truck he drives, German says he feels like a “sharecropper on wheels.”

“My great-grandfather was a slave,” he said. “Back then you could see the chains. Now the chains are invisible for both black and white drivers. Mr. President, help us. Release us from this poverty.”

The Demos report anticipates the concern that raising wages for workers contracted by the government would be a burden on taxpayers. Taub and her co-author Robert Hiltonsmith counter that in cases where living-wage laws and other job standards agreements have been enacted on the municipal or county level, the cost to taxpayers has not risen significantly.

In addition, the productivity gains and lower employee turnover that living-wage laws engender result in widespread economic benefits that outweigh any marginal increase in taxes. More often though, taxes don’t increase at all, because higher wages mean that fewer people resort to other taxpayer-funded programs like food stamps and public health services in order to meet their needs.

Workers with Good Jobs Nation were joined at the press conference by leaders from religious communities, the activist organization Our DC, and congressional representatives.

Minnesota Democrat Keith Ellison and Eleanor Holmes Norton, who represents the District of Columbia as a non-voting member of Congress, announced their intention to write a letter to the president, urging him to pass the executive order Good Jobs Nation and Demos are calling for. Ellison also invited workers to testify in a congressional hearing on May 21 that will address the federal government’s role in subsidizing low-wage jobs. Ellison and Norton both pledged to support the work of Good Jobs Nation and its partner organizations over the long-term.

“The real strength of this movement is going to be our sustained, unrelenting demand for justice,” Ellison said. He warned against what he called, “the fourth of July theory of organizing,” in which all the action is concentrated in one event. 

“On the fifth of July, what happens? It’s quiet. We’ve got to have a fourth of July every day until we get justice for low-wage workers.”

 With such dire conditions driving workers’ demands and the commitment of organizers and supporters, we may see fireworks soon. As complicit taxpayers, we all should at least be waving sparklers.

Understand the importance of honest news ?

So do we.

The past year has been the most arduous of our lives. The Covid-19 pandemic continues to be catastrophic not only to our health - mental and physical - but also to the stability of millions of people. For all of us independent news organizations, it’s no exception.

We’ve covered everything thrown at us this past year and will continue to do so with your support. We’ve always understood the importance of calling out corruption, regardless of political affiliation.

We need your support in this difficult time. Every reader contribution, no matter the amount, makes a difference in allowing our newsroom to bring you the stories that matter, at a time when being informed is more important than ever. Invest with us.

Make a one-time contribution to Alternet All Access, or click here to become a subscriber. Thank you.

Click to donate by check.

DonateDonate by credit card
Donate by Paypal
{{ }}
@2022 - AlterNet Media Inc. All Rights Reserved. - "Poynter" fonts provided by