Documents obtained by The Daily Caller confirm the White House is seriously considering adopting a series of proposals that would favor unionized companies bidding on federal contracts. The documents acknowledge the proposals are likely to increase the cost of government contracting and the size of the bureaucracy.
The proposals, collectively known as “High Road Contracting Policy,” were first reported earlier this month. The basic elements of the policy would give preference to companies bidding on federal contracts that pay their hourly workers a “living wage” and provide health insurance, employer-funded pension plans and paid sick days.
Following the report Republicans slammed the proposal, with Sen. Tom Coburn of Oklahoma referring to it as “backdoor card check.” Other critics, led by Sen. Susan Collins of Maine, worry the new rules would increase the cost of government contracting by as much as 20 percent, or more than $100 billion annually, while further slowing the procurement process.
Proponents of the proposals, including the Center for American Progress and the Economic Policy Institute, argue government contracting should be used as a vehicle for expanding the middle class and many of the workers that would be impacted by the changes end up costing the government more through public assistance programs such as Medicaid and food stamps. David Madland of CAP also pointed to studies on the state and local level that show no cost increase following the implementation of similar policies.
However, in a draft of the policy obtained by The Daily Caller the administration acknowledges the proposals would increase contracting costs as well as the size of the bureaucracy. By the administration’s calculations the proposals would impact as many as 26 million people:
“Some part of the resulting increase in labor costs is likely to be passed on to the government in the form of higher bid prices … In addition, modest staff increases may be necessary to administer the policy.”
The document says those increases would be offset by savings on public assistance, productivity gains and increased price competition. Glenn Spencer at the U.S. Chamber of Commerce disagreed.
“One worry would be that some companies decide it’s just not worth it to engage in government contracting,” Spencer said. “What’s a little bit disturbing about [the proposal] is that it doesn’t require you to pay the higher wages and additional benefits just to workers on a specific contract, but to every employee in country. The impact on employers is likely to be far greater than actual cost of contracting. On that, it’s pretty clear costs will go up.”
EPI vice president Ross Eisenbrey pointed out that may federal contractors earn hourly wages below the poverty threshold and argued that preference should be given to companies that pay higher wages and provide other benefits.
“By favoring [high road companies] we would lift the entire workforce, which as we know has been suffering wage declines and stagnation for decades,” Eisenbrey said.