The largest low-wage employer "is not McDonalds or Walmart but the U.S. government."
Democratic presidential hopeful Bernie Sanders has been outspoken about his desire to raise the federal minimum wage. Last week, ahead of Pope Francis’ visit to the nation’s capital, the senator from Vermont joined low-wage federal contract workers during a strike to advocate for a higher wages. During his speech to protesters, Sanders compared the government to the two companies with the largest U.S. workforces: Walmart and McDonald’s. "There is no justice in America when the largest low-wage employer is not McDonald’s; it is not Burger King; it is not Walmart; it is the United States government," Sanders said. He later tweeted a shorter version of the statement, mentioning only Walmart and McDonald’s. We wondered whether Sanders was right that the U.S. government is the biggest employer of low-wage workers in the country. While Sanders can find some support in the data, he ignores some important qualifiers. By the numbers When we reached out to Sanders’ camp, policy director Warren Gunnels said the claim is based on this 2013 report from Demos, a liberal economic think tank. The report defines "low-wage" workers as those earning below $12 per hour. More critically, the report counts workers who are employed by federal contractors, not those directly employed by the government. Here is a summary of the report’s estimates, which we double-checked for accuracy. The report estimated the number of low-wage workers at McDonald’s by using the percentage of low-wage workers in the food-service industry more generally, while it used a University of California-Berkeley report to estimate the number of low-wage employees for Walmart. McDonald’s total U.S. employees (includes franchise employees): 859,978 McDonald’s U.S. low-wage employees: 580,485 Walmart total U.S. employees: 1,400,000 Walmart low-wage employees: 901,600 Total workers on federal contracts: 6,791,437 Low-wage workers on federal contracts: 1,992,000 So the number of federal contract workers, at nearly 2 million, exceeds the number of Walmart and McDonald’s workers combined, at 1.48 million. Jonathan Rothwell, a fellow at the Brookings Institution, said the difference is due to how large the government is in comparison with McDonald’s and Walmart. Indeed, if you look at the numbers as percentages, low-wage workers make up less than one-third of the total federal contract workforce. By comparison, the percentages for McDonald’s and Walmart are much higher -- 67.5 percent and 64.4 percent, respectively. "It is quite likely that the federal government is the largest vendor of just about every kind of worker -- high, medium, and low-wage workers included," Rothwell said. The government does not directly pay these workers Another problem with Sanders’ claim is his use of the word "employer." Employees on federal contracts are not directly employed by the U.S. government. Workers under these types of contracts work in a wide array of industries, ranging from construction to food service to health care. "The U.S. government does not employ contract workers in the legal sense of the word," Rothwell said. "(Contract workers) work for a firm, which contracts with the federal government." Multiple federal laws govern the pay of federal contract workers. The Davis-Bacon and Related Acts require federal contract workers involved in the construction and repair of public buildings and other public works to be paid "the locally prevailing wages and fringe benefits." More recently, President Obama signed an executive order in February 2014 that raised the minimum wage to $10.10 for all workers on federal construction and service contracts. Obama also signed an executive order in September to make federal contractors give workers up to seven days of sick leave per year. Still, advocates of higher wages for federal contract workers argue these laws aren’t enough. The National Employment Law Project calls federal contract workers "the hidden federal workforce." According to a 2013 report by the NELP, "low-bid federal contracting and exemptions to the Service Contract Act and Public Contracts Act mean that hundreds of thousands of workers paid by the federal government via contractors or similar arrangements work for sub-standard wages in poor conditions." David Neumark, an economics professor and director of the Center for Economics and Public Policy at the University of California-Irvine, agreed that the connection between federal contract workers’ wages and federal government policy is tenuous. "Presumably, the low-wage workers hired by contractors are low-skill workers," he said. "It may suck that low-skill people earn low wages, but that is a problem of the economy more generally. … The claim that we are ‘subsidizing’ low wages is a red herring. We are probably paying market wages. They just happen to be low." Government employees tend to be paid well The federal government directly employs about 2.7 million people, according to Drew DeSilver, a senior writer at Pew Research Center. We couldn’t find any exact statistics on how many of these workers make less than $12 per hour, but according to the Congressional Budget Office, federal government workers with no college degree "earned about 21 percent more, on average, than similar workers in the private sector." "When we look at those directly employed by the federal government, low-skilled workers tend to be paid more than they would get paid in the private sector," said Adam Ozimek, an economist at Moody’s Analytics. "The government actually tends to pay less for higher skilled workers." According to occupational employment statistics from the Bureau of Labor Statistics, 90 percent of workers across all levels of government make more than $12 per hour in half of the 50 states. Our ruling Sanders said that "the largest low-wage employer is not McDonalds or Walmart but the US government." Measured by the raw numbers, more federal contract workers make less than $12 an hour than workers at Walmart and McDonalds combined. But he is incorrect to suggest these workers are directly employed by the U.S. government, as they actually work for private companies. In addition, a much smaller percentage of federal contract workers make less than $12 an hour when compared to McDonald’s and Walmart. In terms of actual government employees, the U.S. government has historically paid low-skill federal civilian workers more than similar occupations in the private sector. We rate this claim Mostly False.
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