Responsible federal contracts for workers

America's roaring, future-is-bright middle class is gone. Its memory is a precious keepsake that America stores in an attic trunk, hoping that the cut of dress will be back in style one day. Meanwhile, real income for working-age households continues to fall, as it has since 2000. Even people with jobs — those of us left — are paddling backward.

Our president understands this. As a prescription, one of Barack Obama's first acts upon taking office was to create a Task Force on the Middle Class and put his VP, Joe Biden, at the helm.

Well, the first annual report was just issued. And if you didn't hear much about it, that's because it's not particularly groundbreaking, treating symptoms more than the disease.

What would have really made news is if Biden's group had boldly investigated structural economic changes designed to boost worker prospects, such as the adoption of the kinds of labor laws well-established in Germany. For example, co-determined boards have kept good jobs in Germany while maintaining healthy economic growth. Co-determination is where workers get to elect half the board of directors of large corporations. Now that's a way to keep employee interests on the table. (See Thomas Geoghegan's piece in the March Harper's magazine for more on this.)

But Obama gets branded "socialist" for suggesting a health care overhaul built on private health insurers and drug companies. He's not going to rewrite corporate governance to give employees a say.

Still, Biden's task force, as timid as it was, did recommend one item that would substantially help. It is called "Responsible Federal Contracting," and what that means is twofold. First, contractors paying workers living wages and providing decent benefits would get a preference when competing for federal procurement dollars. And second, only responsible companies that respect tax, labor, health and safety and consumer protection laws would qualify as federal contractors.

The federal government spends about $500 billion in contracting every year. It should demand that workers at the end of this spigot get a fair shake. According to David Madland, director of the American Worker Project at the Center for American Progress, a nonprofit think tank, about 20 percent of all workers under federal contract are not earning enough to keep a family of four out of poverty. And many of those don't receive health insurance or other key benefits.

He says that paying these workers living wages would have a snowball of positive effects, not only for them but for taxpayers. These families typically end up on the rolls of Medicaid or other state-sponsored health insurance. They get food stamps and qualify for the Earned Income Tax Credit.

Take the U.S. military uniform industry. A study done in 2006 by UNITE HERE, a union representing textile and hospitality workers, found that the companies making military uniforms paid an average $6.55 per hour, seriously below even the average for the domestic apparel industry at the time of $9.24. As a consequence, these underpaid workers ended up costing taxpayers an estimated $45 million annually in welfare help.

Wouldn't it be better to spend this money on the front end, giving working-class families some self-sufficiency and dignity?

As to limiting federal contracts to companies that obey the law, that was something President Bill Clinton sought to write into regulations. But President George W. Bush vacated those regs as soon as he could.

In Bush's oh-so-Chamber of Commerce vantage point, cheating a low-wage worker out of overtime or dumping toxic chemicals, well, that's just a different kind of business model.

Madland says the work of "high-road" businesses that follow the law and pay workers reasonably is generally of higher quality, saving taxpayers in another way, by doing jobs right the first time.

Twenty-two percent of employees in the United States work for companies that get federal contracts. If Obama adopted these responsible business rules by executive order, it would instantly make worker pay and benefits a new focus for those firms. Then, by encouraging decent compensation for the lowest wage workers, salaries would rise higher up the ladder, helping the middle class. Which is just what the doctor ordered.