The Federal Government Creates More Low-Wage Jobs Than McDonald's, and You Pay For It!

I recently read an article from NBC news that reports on a study done by Demos about low-wage jobs created by federal funds as a by-product of federal contracting.  The findings show that the federal government produces more low-wage jobs that the private sector, and Demos finds it hard to fathom.  Demos uncovered great findings, but their analysis is pathetic.  They want to blame federal contractors for somehow bypassing a so-called "federal standard" to pay the prevailing wage for a specific skill in an area, and they accuse the federal contractors of returning millions in profits while creating tons of low wage jobs.  In the analysis, Demos overlooked several factors.

First and foremost, the federal government awards contracts based on lowest bid, and they don't audit the bids for parity.  In other words, the federal government wants to spend the least amount possible without regard for how the contractor achieves the lowest cost, so is it surprising that the contractor might actually cut costs by reducing labor expense?  In business, the biggest cost factor is personnel, so come on, let us not be ridiculously naive in our understanding of that in which we willfully engage.

Second, who created this system anyway?  Did the federal government not generate the system in all its minute details?  My question would be whether or not anybody in their right mind had a legitimate expectation that a bureaucracy with hundreds of layers ever had a real hope of supervising anything it created in the first place.  Do we really expect efficiency from an entity that must have an actual hotline for whistle blowers to call and report "Fraud, Waste, and Abuse"?  In spite of this, someone actually feigns shock when an entrepreneurial private enterprise, tasked with efficiency, actually produces savings, albeit in the form of lower wages, which is "against federal guidance".  It is worth mentioning that people actually willingly take the so-called low-wage jobs.

Bureaucracy requires people to run it, and the people running the bureaucracy require wages to do their own jobs.  Taxation produces the funds to pay the bureaucracy as well as to engage in contracts to perform federal functions.  If taxes dilute themselves through many different layers, what is left by the time the tax dollars make it into the federal contracts?  In other words, what starts out as a dollar from a taxpayer does not equal a dollar in a federal contract, so does it not stand to reason that the federal government, in requiring several different people to engage in functions ordinarily done by one or two people, would be inherently inefficient.  More to the point, the federal government consumes the portion of the wage that would normally be added to the low-wage portion thereby making it high wage.  It takes more money to complete a federal task because of the bureaucracy, but does anyone want to try to understand it?

In short, if you want to point a finger at the low-wage jobs created by the federal government, one need look no further than the federal government itself.  Privatizing industries produces efficiency when competition thrives.  It is really quite basic.

To read the full article, click here.