Is the Demos Study to be believed?

When I heard President Obama's vow to set a floor of $10.10 per hour for any worker on any federal project, I had to scratch my head.  I worked in the Defense industry from 1994 to 2010 and never once ever heard of any sort of federal contractor being paid that low, ever.

I am not saying that they can't exist, I am not even saying that I would deny they exist if presented with some reasonable evidence.  I'm just saying that if they did actually exist there would be some payroll record evidence for the hundreds of thousands of federal contractors out there.

So I checked around for a source, and I mean an authoritative source, some sort of government accounting of contracts and what the end workers were receiving.  I am still looking for that and it will appear here if I ever find it.

What I did find was what news writers were citing left and left, a Demos survey of some workers:  UNDERWRITING BAD JOBS: HOW OUR TAX DOLLARS ARE FUNDING LOW-WAGE WORK AND FUELING INEQUALITY

The title does not sound very impartial, neither does the organization.  I am still looking into this and will flesh it out here.  Until then, I would not put much stock into a survey that is not backed with actual payroll data.

Early on, one of the Demos gripes is that small business loans go to firms that pay less than $12/hour for some jobs:

Jobs Funded Through Small Business Administration Loans 

The Small Business Administration also subsidizes private sector jobs, principally through its 7(a) and 504 Certified Development Company loan guaranty programs. According to the agency’s financial report, these two primary loan programs supported $30.3 billion in lending in fiscal year 2012, subsidizing 609,437 jobs.8 An estimated 204,000 of these jobs were low-wage positions: about half of low-wage SBA-supported jobs were in the service sector and another quarter were in wholesale and retail trade.

Note that earlier in the report they define "low wage workers" as those paid less than $12/hr.

We define low-wage work as a job paying $12 an hour or less, equivalent to an annual income of about $24,000 for a full- time worker. Nationwide, a family of four trying to subsist on $24,000 a year hovers near the poverty level. Even a single worker with no dependents would find no room in a basic budget for health coverage, a retirement nest egg, or building emergency savings. (See actual report for associated footnotes)

They provide this handy table, to show I suppose, that every person who sees a federal dollar from any distance needs to receive a dozen of them every hour:


They quoted an anonymous worker, from some unnamed year (possibly 2011) saying they made $10.25/hr when they met their quota, but if the quota was not realized they received $7.25. This must have been before Obamacare, since the worker claimed to have company-provided health insurance with only a $3,000 deductible.  The worker was quoted saying newer workers are paid better.  No actual payroll information, not even advertisements for jobs printed in newspapers were included as evidence.

Next to the vignette by Anonymous, is a section that flows about the same as the rest of the report, and their citations leave something to be desired.  In this section, I will add their sources after their footnotes:

OUR TAX DOLLARS: At Least 11,000 Poorly-Paid Workers 

The U.S. apparel manufacturing employment peaked in 1973, when 1.4 million Americans were employed making clothing.¹¹ (Murray, 1995) Due to technological change and growing imports from abroad, just 133,000 Americans worked in the industry by 2012.

Note they are using apparel industry-wide numbers, not government/defense industry.

Yet apparel manufacturing is worth highlighting because it is a predominantly a low-wage industry where nearly one out of every seven dollars in revenue comes from taxpayers. The clothing they make includes uniforms for the U.S. military.

An apparent attempt to confuse the issue.  One out of every seven dollars in revenue in the entire industry may indeed come from government contracts, but nowhere do they tie this to what the employees on federal contracts actually make through payroll records.

Overall an estimated 58 percent of U.S. apparel manufacturing employees earn $12 an hour or less: sewing machine operators, the largest occupational group, earn a median wage of $9.29; textile cutting machine setters, operators and tenders typically earn $9.90. More troubling still, a 2006 survey of workers at eight federal apparel contractors found that many employees were actually paid far less than the industry median, earning just $6.55 an hour on average.¹² (UNITE HERE!, 2006) Most of the workers surveyed had no health care coverage and reported labor and employment law violations, including forced overtime and hazardous work conditions.

They cite items like "many workers," yet they never bother revealing exactly how many were surveyed nor how many from those samples reported earning $6.55/hr, etc.

While I am sure that UNITE HERE! had some fine folks in their 2006 statistics department, whatever study is being quoted in their name is not apparent on their website.

The items in parenthesis in the quoted passages are the references in their endnotes.  If I ever handed in a set of endnotes like this report uses, for any course, at any time, especially in any Statistics, Accounting, or Finance class I would have earned an F.  It is safe to say that this report is not referenced at all.

They follow the same pattern through food service and other industries, citing estimated revenue of the industry as a whole, then citing a few low paying positions, like waitress and line cook, then bringing up this:

In 2012, nearly a billion dollars in federal contracts went to this industry, subsidizing an estimated 13,000 low-wage jobs. While the federal footprint in the industry is small, additional low-wage food service jobs were subsidized through SBA loans and through the National Parks Service and other public agencies that grant concessions to low-wage restaurants, snack bars, food carts and other food service establishments to operate on public land.

The "federal footprint in the industry is small" part brings a chuckle, as "nearly a billion" is certainly a small footprint in a $630 Billion industry.

There is a quote by name a bit later, one Guadalupe Rodriguez who is alleged to have been on the janitorial staff of Union Station:

My name is Guadalupe Rodriguez and I work for a janitorial company that cleans the commercial area of Union Station, a federal property. For 19 years I have cleaned this building, yet I only get $8.75 an hour – without benefits. Throughout all these years, I have received increases only when the federal government raised minimum wage, which helps, but is not enough to live on…I hope the company I work for would offer me health benefits someday.

Turns out she is quoted just that way quite a few places around the internet.  Many of them are the same article by someone named Martha Burke, whose author profile at OtherWords is nothing but a face shot, without any words.  Finding precisely which janitorial firm Ms. Rodriguez works for is a bit difficult, since there appear to be several and no article mentions the one she works for.

The overall story, like the "strike" of non-union Pentagon employees is of a circular nature too, since Salon does not bother quoting what any of the striking employees actually make, they merely point back to the flimsy Demos report.

Bloomberg reports that there are some concessions outlets in some federal buildings that pay less than $10.10, which is really a stretch for this topic.  Those are separate businesses that the feds charge rent to, as if the feds are operating a shopping mall with a food court.  They are not, and never should be confused with, and executive dining room or such.  What is next?  Demanding that the entrepreneur employing her entire family in a string of food carts across the street be included too?

Again, nowhere in the report, nor in any of the reports they claim were used in their report, nor in the Burke story, nor anyplace else is any actual payroll data cited.  Yet the Washington Post, Slate, and others are using it as their basis that there is a federal contracting employee out there, somewhere, making less than $10.10/hr.

By-the-way, if $10.10 is supposed to be such a dandy wage, why isn't the President cutting everybody else in the federal government to that rate?  According to him, "At some point you've made enough money."

Ⓐ Steve Ⓐ