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Federal Government as Employer: High Road or Bottom Feeder?

It hardly makes sense to try to promote high standards for federal contractors while seeking to reduce the benefits of those already on the federal payroll.

A mail carrier works while weathering a 6 to 10 inch snow storm and teen temperatures in New York City, January 12, 2014. (Photo: eddtoro /

The federal government has long been a model employer. It often has taken the lead in providing workers with benefits like on-site child care, paid family leave and flexible work-time options in addition to more standard benefits like health-care insurance and pensions. After seeing that these sorts of benefits could be provided at a reasonable cost, private employers often follow suit. Usually the first private adopters are large firms, but if the largest firms can provide benefits without too much disruption, smaller firms are likely to go this route as well, in part to be able to compete for workers. Through this mechanism, the labor practices of the federal government can have a substantial impact on the larger labor market, even without legislation by Congress mandating specific practices.

President Obama is well aware of this pattern. This is why he issued an executive order last year requiring federal contractors to pay their workers more than the federal minimum wage. This will directly affect a large number of workers, but it is likely to have a spillover effect that is several times larger.

The same story applies to President Obama’s more recent executive order requiring contractors to offer workers paid sick leave. This could help to encourage the practice of providing paid sick days to a much larger segment of the workforce. (As a practical matter, it would be difficult for a large firm to arrange to have paid sick days for a subset of workers employed on federal contracts, but to not provide the same benefits to the rest of its workforce.)

Historically the federal government has been especially important as an employer of women and African Americans. At a time when both groups were largely excluded from all but the most menial jobs in the private sector, the federal government offered them reasonably well-paying and secure jobs. Women and African Americans with college and advanced degrees were hugely over-represented in the federal workforce and still are today.

These are reasons the public should be especially concerned about the employment practices of the federal government. President Obama has been quite visibly using his executive power to try to promote good workplace practices among federal contractors. But at the same time his administration has been looking to restructure federal agencies with the hope of saving money by downgrading the job quality of large numbers of positions. Many permanent jobs that provide a livable wage and benefits may end up being replaced by part-time or temporary positions.

This risk can be seen in the Defense Department’s plans for the “Force of the Future.” The plan explicitly outlines plans to have federal pay patterns more closely emulate those in the private sector. That may be a positive change for higher end technical and management personal, who could end with more pay and benefits. But this could imply substantial downgrading for tens of thousands of less-well situated federal employees. For these workers, the changes being put forward in this plan are likely to mean lower pay, fewer benefits and less job security.

As a huge employer, the federal government has considerable discretion in its management practices. It can act like many private employers and try to pay as little as possible for its workforce. This is likely to have a cost in higher turnover and demoralized workers, but it will mean less money for pay and benefits. There is some evidence that the steps in this direction have already had some effect. In the most recent data from the Labor Department on job openings, the rate for August was than 40 percent above the average for 2007, the last year before the start of the recession. This indicates workers see the federal government as a less attractive place to work than was previously the case.

The alternative employment path is the high road that President Obama promoted with his executive orders on the pay and benefits for workers hired by federal contractors. It hardly makes sense to try to promote high standards for federal contractors while at the same time seeking to reduce the pay and benefits of those already on the federal payroll. Hopefully President Obama will stick to the high road path.

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