In April of last year, the White House released an Executive Order to bump the minimum wage to $15 per hour for all workers employed by federal contractors. Now, this decision seems prescient as inflation and the cost of living hammer low-income workers.
Despite the order, which resulted in more than 4.1 million Americans getting a wage increase, many federal workers are still struggling to pay for basics like food, shelter, and healthcare. This is a problem all across America, including in my city of Alexandria, Virginia, which is a stone’s throw from the nation’s capital.
Today, the federal contract workers who are arguably struggling the most are those employed by companies operating under the Service Contract Act. These “blended federal workforce” employees typically consist of individuals from low-income communities – often women of color – performing work such as housekeeping.
These folks are not well-compensated contractors working for the defense or consulting industries. Rather, these are the essential workers who keep our government functioning.
Although President Joe Biden’s minimum wage increase did put more money in the pockets of the more junior employees, it failed to benefit the more senior workers with longer tenure and experience. As a result, those who have a decade of experience are being paid the same amount as those who have only 1 or 2 years of experience. This workplace phenomenon is known as wage compression, and for some of these workers, it has led to their striking and demanding better salaries and benefits.
Ultimately, this issue is about fairness.
Because many SCA contracts were signed before Biden’s federal minimum wage increase, the SCA does not address wage compression. To raise salaries and increase benefits for all of their employees, especially the more experienced workers, contracting companies must cut into their own revenues. This is not fair to the companies implementing these projects because it reduces the profits the SCA contract promised they would earn.
Of course, additional Executive Orders from the White House could mandate employers pay more. But a new President could overturn them, increasing unpredictability for both employers and workers.
This is fixable.
Lawmakers on Capitol Hill should consider creating a formal process allowing companies that operate within the SCA to apply for more federal dollars that could only be used for employee compensation and benefits. Again, the corporations complying with the SCA would not be entitled to additional profits but only more money to ensure their workforce is compensated fairly.
Congressional reform of the SCA is also in the best interest of Americans because if a federal contract worker – for example, at a call center for seniors with questions about a program like Social Security or their veterans’ benefits – is underpaid, overworked, and understandably becomes resentful, it is the taxpayer who may receive less reliable customer service. Anyone who has ever earned a salary understands that workers respond positively to being compensated fairly, or negatively to being under-appreciated.
In the name of fairness, I hope Congress will pass legislation to modernize the SCA. Only then will President Biden’s Executive Order to raise the minimum wage for federal government contract workers benefit both new and tenured employees, all of whom deserve to be rewarded for their commitment to public service.
Allison Silberberg is a former mayor of Alexandria, Virginia, and a board member of Centrist Democrats of America.
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