Underwriting Bad Jobs: How Our Tax Dollars Are Funding Low-Wage Work and Fueling Inequality

Source: Amy Traub, Robert Hiltonsmith, Dēmos, May 2013

From the introduction:
Every day, Americans benefit from public structures that contribute to our quality of life. When we walk into a clean, well-maintained post office; drive on federal highways; send our kids to school knowing they’ll get a hot lunch; or call the Social Security benefits office with a question, we see our federal tax dollars at work, providing public services we rely on.

We find that nearly two million private sector employees working on behalf of America earn wages too low to support a family, making $12 or less per hour. This is more than the number of low-wage workers at Walmart and McDonalds combined. Yet, if anything, this figure underestimates the total number of poorly-paid workers funded by our tax dollars. Our analysis encompasses U.S. workers employed by government contractors, paid by federal health care spending, supported by Small Business Administration loans, working on federal construction grants, and maintaining buildings leased by the federal government. This encompasses the largest share of poorly-paid workers funded by our taxes. However, other streams of funding have yet to be analyzed. For example, loans and subsidies from the Department of Agriculture fund giant agribusinesses that employ more than a million farm workers, while grants from the Department of Education fund low-wage assistant teachers, bus monitors and cooks in Head Start and other programs. Due to lack of data, retail and food service workers for concessionaires of the National Parks Service and other federal agencies also fall outside our analysis….

…When our tax dollars underwrite bad jobs, the economy as a whole is weakened and all of us are negatively affected. There is a ripple effect as low-paid workers and their families have little money to spend, hindering economic growth that could be creating more jobs. Poorly-paid workers also contribute less in taxes and are more likely to rely on public benefits to care for their families. In contrast, we would all benefit from an economy where workers earn good wages—and we have a special responsibility to see that the people working on behalf of our nation are paid and treated fairly. Raising standards for people working on behalf of America is one important piece to providing opportunities for workers to reach the middle class….