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On May 21, I had the opportunity to testify before a Congressional Progressive Caucus, meeting on the fact that federal dollars drive inequality by paying contractors who pay too many of their workers very little.  The hearing was driven by a study from Amy Traub and her colleagues at Demos, a New York based think tank, that issued a report exposing the many ways that federal contracting often adds to the burden of the low income, especially those who earn less than $12 an hour, or less than $25,000 a year.

If these workers have even one child, they are living at or below the poverty line.  As summer looms, we know that children who are in summer programs will be better prepared when they return to school in the fall. Yet those with income limitations will find it difficult to pay fees that range from $50 to $125 a week for summer enrichment programs.  This cycle of disadvantage means that low wages yield more limited opportunities for students who, but for their parental situation, might be exposed to the kind of opportunities that would make them more competitive for college admissions. Their limited wages create a cycle of disadvantage for children.

The Obama Administration has supported a “Race to the Top” in education, yet job creation suggests that we are running a “Race to the Bottom” in terms of job creation.  We are underutilizing talent and expertise when we sideline so many Americans.  Those over 50 who have experienced downsizing have moved into lower paying retail jobs.  New college graduates have been pushed back into their parents’ homes, and into low-wage jobs because there is little else available.  Too many take unpaid internships to make them more competitive for future jobs, working at night or on weekends in the retail market because these are their scant possibilities.

Some economists suggest that we are in an economic expansion, not a recession, and the 2.5 percent GDP growth last quarter might support that.  Still, there has been little trickle down from the top to the bottom.  People take what is offered in salary because they have few choices. The federal government can help or hurt these workers depending on how they choose to protect them with minimum wage legislation, with regulation on federal contractors, with requirements to make health care and other social protections available.

Instead, according to Demos we have millions of workers who work full time, but are paid at low wages, thanks to federal contracting policy.  If government takes the lowest bid to provide services, workers will likely earn the lowest wage.  If our government specified that a living wage and benefits are part of the contract we would reduce inequality.  Today, too many contracting executives earn six or seven figure salaries, while workers earn poverty-level wages.

I am especially concerned about home health care workers, and others in the hospital services industry because these are predominately black and brown women, taking care of our sick, infirm and elders.  How can we expect these workers to offer the highest quality care, when we are not offering them the highest quality wages?  These are women who bring chips of ice to the dying, who hold a hand and say a prayer to someone who needs comfort.  They rub the feet and massage the heads of those who are in pain.  What if the low wages they are paid becomes a stressor, not allowing them to fully focus on their work for worries about their own economic survival?

Our economy has been bifurcated between those who have good jobs and bad jobs.  Good jobs have decent pay and benefits, while bad jobs have hourly pay and none of the above.  Increasingly, the Great Recession has pushed former good job workers into bad jobs, and bad jobs have become the norm for too many. We may be creating a permanent underclass by offering too little to too many, using federal funds to subsidize this inequality. When full –time workers need food stamps and federally subsidized health insurance, when full-time workers cannot afford apartments, when full time workers give full effort and remain in poverty, then we have turned the American dream into a nightmare!

We cannot compete in this global economy if we cannot pay people wisely and well.   Without regulation, the private sector may pay unequal wages, but there is no reason for the federal government to do the same thing.

Dr. Julianne Malveaux

Dr. Julianne Malveaux is a member of the National African American Reparations Commission (NAARC), an economist, author and Dean of the College of Ethnic Studies at California State University at Los Angeles.