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Policy: Labor

EXography: Federal workers make up to twice as much as others doing same job

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Map showing wages for this occupation. Watch while it cycles or toggle to select one.
Percent federal contractor floor pay exceeds median local wages

Feds mandating companies pay above market rate

The minimum wage federal contractors must pay in each region versus the median salary for that occupation there

Source: Washington Examiner analysis of Bureau of Labor Statistics Occupational Employment Statistics and WDOL.gov Service Contract Act data. Watchdog,Jobs,Labor,Economy,EXography,Luke Rosiak,Follow the Money,Spending,Minimum Wage,BLS,Logan Porter

Most carpet-layers in Peoria make $10.27 an hour or less, but the government requires federal contractors to pay at least $22.23 an hour for the same work in the Illinois city.

In Troy, Mich., most painters make $13.05 an hour or less, yet every painting company doing business with the federal government must pay its painters at least $26.60.

Across the country, employees of companies with federal contracts make up to twice what others doing the same work in the region make, dramatically increasing the costs to taxpayers, a Washington Examiner analysis found.

Under the Service Contract Act of 1965, contractors are paid a minimum wage determined to be “prevailing” in the area by the Labor Department.

But those “prevailing wages” are often far off the mark, according to the analysis, which compared every SCA "district" with far more authoritative figures compiled by the Bureau of Labor Statistics.

The law directs the government to keep hourly rates in line with the regional typical rate to ensure the government’s buying power doesn’t drive down average wages.

But instead, it often has the opposite effect, creating two tiers of workers with comparable skills: Those making the free-market rate and those who are far better compensated and whose salary comes indirectly from Uncle Sam.

Washington-based bureaucrats “rely on professional judgment when calculating wage rates,” as the Government Accountability Office put it, to assemble what the Examiner found were more than 132,000 different regularly updated dollar figures, decreeing what workers should make in each of 339 occupations across 390 regions.

The bureaucrats use BLS rates as one metric, but then adjust them for various factors, even as they make assumptions to fill in information gaps.

For example, if they don't know what one profession is, they'll apply the rate of another that sounds similar. But they do “not include a description of the methodology used to derive the wage rates.”

Those are some of the reasons why in Buffalo, N.Y., those who repair and change tires without a government contract are paid a median hourly wage of $8.98, whereas those contracted by a government entity for the same job earn $18.78.

Labor Department “analysts” sometimes use the mean and sometimes the median to calculate wage rates, seemingly on a whim, GAO found. Means and medians are both ways of finding typical wages, but produce different results.

There is room for error because despite all the resources dedicated to the task of deciding what every occupation in every market should pay, the legislation doesn’t define the terms “prevailing” or “in the locality.”

They at times set the prevailing wage to the rate that union workers earned instead of the rate that the broader pool of workers earned, "with no evidence or only oral assurance from union representatives that union rates prevailed in the locality," GAO found.

The SCA also requires that the Labor Department give “due consideration” -- which isn't defined -- to what federal employees would be making doing similar jobs, thus seemingly defeating the purpose of outsourcing the jobs to private companies to save money.

The government’s estimates were two to three more times likely to pay a contractor more than the local median than less, the Examiner analysis found, but they sometimes err in that direction, too.

Contractors, employees and unions gripe that “the resulting wages do not necessarily reflect local wage conditions,” the GAO said.

The government-mandated wage is actually only the floor.

“I pay above and beyond those rates,” said Shane Conner, owner of Advanced Technologies in Electrical and Communications, a Lebanon, Ind.-based telecommunications company. “My guys are paid very well.”

Stan Soloway, president and CEO of the Professional Services Council, a trade association for government contractors, maintained that most merely pay the minimum.

“The objective is to have the prevailing wage be the fair wage rate,” he said. “If [a contractor] pays over that wage, [the contractor] is not going to be able to win the contract.”

That scenario would seemingly lead to a flat wage structure where workers have little incentive to work hard or improve their skills because junior workers are paid the same as top performers. It might also shed light on a contracting culture that has seen myriad failures in recent years.

As the GAO put it, "Such prevailing rates, by their nature, do not recognize the limited skills and experience of newly hired or entry-level workers and assume that all workers in a job classification are entitled to the same wage rate.”

Contractors who do want to keep advanced talent then wind up paying far more than the minimum, the GAO said.

“Adjusting the wage differentials for higher skilled and more experienced workers ... can quickly escalate wages.”

Most contractors contacted by the Examiner appeared unworried, since they only must win business over fellow federal contractors beholden to the same rules.

Plus, the higher wage costs were built in to the prices paid by the government, which leaves only taxpayers as losers.

GAO, the research arm of Congress, has been calling attention to these problems since it published a 1983 analysis titled "Congress Should Consider Repeal of the Service Contract Act."

It concluded then that the wages were inaccurate, and that retooling their methods "to accurately determine prevailing wage rates and fringe benefits would be very costly to develop."

The GAO study also said the SCA was duplicative and unnecessary because of other wage protections such as the Fair Labor Standards Act.

The BLS collects data by metropolitan area, but the Labor Department unit responsible for SCA determinations creates its own unique districts.

SCA administrators also rely on their own job categories, which are rarely updated, making it difficult to deal with occupation like computer programming.

The seemingly arbitrary job categories also group professions together that could have varying compensation levels in reality.

“For example, an issue was raised of whether it was more appropriate to classify the occupation ‘truck dispatcher’ as an administrative, clerical, technical, or professional position, when each category brings with it a different level of wages and benefits,” GAO wrote in 2005.

At an equally arbitrary point in one’s career advancement, a person can move to a “professional” category that is exempt from SCA. Construction contracts are covered by another set of wage calculations.

The Examiner selected a handful of occupations for which BLS and SCA job titles were the same and compared them across every region. The Examiner was unable to find any previous analyses that provided an equally robust comparison.

Other jobs contain even wider differences in some localities, a random review of additional jobs in select regions showed.

Here are some of the biggest pay gaps among the 10 occupations reviewed comprehensively by the Examiner.

Some large disparities in federal minimums vs. free-market medians

Metropolitan area (BLS) Job Federal contractors Median wage Difference
Dover, DE Painter, Maintenance $21.97 $9.17 240%
Peoria, IL Carpet Layer $23.22 $10.27 226%
Newark-Union, NJ-PA Civil Engineering Technician $25.21 $11.66 216%
Lincoln, NE Carpet Layer $18.06 $8.39 215%
Wheeling, WV-OH Painter, Maintenance $19.35 $9.22 210%
Buffalo-Niagara Falls, NY Tire Repairer $18.78 $8.98 209%
Davenport-Moline-Rock Island, IA-IL Telephone Lineman $27.64 $13.23 209%
Warren-Farmington-Hills-Troy, MI Painter, Maintenance $26.60 $13.05 204%
Edison, NJ Painter, Maintenance $26.69 $13.30 201%
New York-Wayne-White Plains, NY-NJ Carpet Layer $27.98 $15.19 184%
Edison, NJ Tire Repairer $17.20 $9.41 183%
Allentown-Bethlehem-Easton, PA-NJ Carpet Layer $27.98 $15.5 181%
Detroit-Livonia-Dearborn, MI Telephone Lineman $26.29 $14.73 178%
Augusta-Richmond County, GA-SC Carpet Layer $15.52 $8.75 177%
Bay City, MI Tire Repairer $16.81 $9.63 175%
Detroit-Livonia-Dearborn, MI Tire Repairer $19.58 $11.25 174%
Lincoln, NE Pipefitter, Maintenance $26.10 $15.12 173%
Allentown-Bethlehem-Easton, PA-NJ Painter, Maintenance $26.69 $15.55 172%
Kingston, NY Pipefitter, Maintenance $29.88 $17.37 172%
Columbus, IN Truckdriver, Tractor-Trailer $22.50 $13.13 171%
Flint, MI Tire Repairer $19.58 $11.42 171%
Janesville, WI Painter, Maintenance $19.23 $11.32 170%
Yuma, AZ Tire Repairer $15.52 $9.12 170%
Dover, DE Pipefitter, Maintenance $30.24 $17.94 169%
Dayton, OH Pipefitter, Maintenance $23.71 $14.24 167%
Ocean City, NJ Painter, Maintenance $24.18 $14.44 167%
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