Dems struggling to help low-wage contractors harmed by shutdown

Dems struggling to help low-wage contractors harmed by shutdown

Democrats are struggling to come up with a way to provide back pay for low-wage contractors losing income because of the partial shutdown, a complicated process that hasn’t been tackled during previous government closures.

Contracted maintenance workers, cleaners, security guards and cafeteria staff at government buildings are among the hardest hit by the shutdown, which began Dec. 22.

ADVERTISEMENT

Unlike the hundreds of thousands of affected federal employees who often receive back pay after a shutdown ends, low-wage contractors are not afforded compensation once the government reopens.

While President TrumpDonald John TrumpTrump claims media 'smeared' students involved in encounter with Native American man Al Sharpton criticizes Trump’s ‘secret’ visit to MLK monument Gillibrand cites spirituality in 2020 fight against Trump’s ‘dark’ values MORE is expected to sign legislation that would eventually give back pay to federal workers, even ensuring similar compensation after future shutdowns, contractors are not covered in that bill.

Senate Democrats say they are looking for a solution, but it’s proving to be a surprisingly tricky problem to fix.

“That’s putting it mildly. It’s not easy,” said Sen. Ben CardinBenjamin (Ben) Louis CardinDC train system losing 0k per day during government shutdown IRS shutdown plan fails to quell worries GOP senators would support postponing State of the Union MORE (D-Md.), who represents a state with thousands of federal workers and contractors.

Government contractors can cover anything from outsourced services for agencies, such as cafeteria service at federal office buildings, to major off-site projects. Lawmakers say they want to help low-wage workers who are shut out of work while doing so in a way that doesn’t pad the pockets of higher-wage contractors who can more easily withstand the financial strain of a shutdown.

Figuring out exactly how to get the money to employees is no easy task, according to legislators.

ADVERTISEMENT

“It’s hard to get that definition and it’s hard to figure out, because our relationship is with the contractor, not with his or her employees,” Cardin said. “It’s tough for us to figure out how to legislatively fix that.”

To complicate matters further, of the nine federal agencies affected by the shutdown, each deals with contractors differently. Some major contractors that deal with multiple agencies are still receiving revenue from the roughly 75 percent of the government that is functioning as normal, while smaller firms are taking a bigger hit to their cash flow and bottom line.

“The contractor has to decide whether to furlough the worker, force them to use vacation days, or just pay them a stipend out of their own pocket, which they probably won’t be paid back,” says Tony Anikeeff, who co-chairs the government contracts practice at the Williams Mullen law firm.

It's not clear how many contract workers there are overall. One estimate puts it as high as 3.7 million people, about half the size of the directly employed federal workforce, including military and postal employees.

And Local 32BJ, part of the Service Employees International Union, said at least 2,000 of its members are affected by the shutdown.

But what is clear is that the number has grown over the years, with more agencies outsourcing cleaning and food services, replacing federal workers with contractors.

Experts say one concern is whether legislation like the kind Democrats are exploring would lead to moral hazard and fraud.

If contractors know their employees will eventually be paid, experts say they could furlough more of them with the knowledge that the government will pick up the tab.

“If you think about the government and a contractor, it would be hard — and this would really open the doors for potential fraud — but Congress could say that the time lost could be compensated,” said Anikeeff.

Democrats say the large, profitable contracting organizations have enough money to cover most workers' salaries during a shutdown, or even temporarily move them to other projects. For that reason, lawmakers are focusing on the low-wage workers who staff federal buildings.

But even big contractors can face challenges.

Executives at two top government contractors — SAIC and Engility — reportedly have to pay $10 million a week to workers who are shut out of projects during the shutdown. The government, meanwhile, was said to be about $40 million behind in payments to the two firms at the three-week mark of the shutdown.

In the House, Del. Eleanor Holmes NortonEleanor Holmes NortonDC and Puerto Rico share the long-ignored dream of statehood Dems struggling to help low-wage contractors harmed by shutdown The Hill's Morning Report — Groundhog Day: Negotiations implode as shutdown reaches 20 days MORE (D-D.C.) introduced a bill that would provide back pay for any “retail, food, custodial, or security services” contractors put on leave due to a shutdown. But so far Democratic leaders have not included it in their legislation aimed at fully reopening the government.

“Unlike many other contractors, those who employ low-wage service workers have little latitude to help make up for lost wages,” Norton said. “We must act to ensure that low-wage, federally contracted service workers are not put at a unique disadvantage by the Trump shutdown.”

Norton’s bill, which has about 15 co-sponsors and would authorize but not appropriate funds for low-wage contractors, is seen as a starting point while specific language is worked out.

“I think it’s a matter of building support, at this point,” a Norton spokesman said. “The intent is there, but the execution is important.”

If workable language is drafted, Democratic leadership would support such legislation, according to a Democratic House aide.

Republicans, on the other hand, have been less effusive in their support.

A spokesman for Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellGraham angers Dems by digging into Clinton, Obama controversies Senate GOP eyes 'nuclear option' for Trump nominees next week Taiwan’s President Tsai should be invited to address Congress MORE (R-Ky.) said they would not address hypothetical legislation. He declined to say whether McConnell supported the principle of providing back pay to low-wage contractors affected by shutdowns.

The Hill reached out to every Republican member of the Senate Appropriations Committee for comment. Only one, Sen. John HoevenJohn Henry HoevenDems struggling to help low-wage contractors harmed by shutdown Trump to address nation on wall Here are the lawmakers who will forfeit their salaries during the shutdown MORE (N.D.), expressed support for providing contractors with back pay, though none explicitly opposed the concept.

Senate Democrats think part of the solution has to come from the Trump administration.

Sen. Chris Van HollenChristopher (Chris) Van HollenDC train system losing 0k per day during government shutdown Senate Dems introduce legislation to back-pay low-wage contractors Government shutdown impasse is a leveraging crisis MORE (D-Md.) on Thursday sent a letter backed by 33 other senators to acting White House budget chief Russell Vought, urging the administration to secure back pay for federal contractors.

“Government contracts typically have provisions to modify the terms of the contract,” the senators wrote. “Federal contracting officers should use these provisions to work with contractors to provide back pay for employees who lost wages as a result of the government shutdown.”

Some experts note that it’s impossible to protect everyone affected by a shutdown.

“I would look at the ripple effect not just for contractors but the support industry for government that rely on government and don’t have customers right now,” said Dan Blair, former deputy director in the Office of Personnel Management.

“Think about the restaurants, the food trucks, the parking garages, all the Uber drivers who cater to government workers and contractors and are losing business,” said Blair, who’s now senior counselor at the Bipartisan Policy Center in Washington.

The negative economic consequences of the shutdown are only expected to grow.

As of Saturday, the shutdown is officially the longest in U.S. history, and there are few signs it will end anytime soon.

Trump said Thursday he was canceling a planned trip to the World Economic Forum in Davos, Switzerland. The president had said he would skip the trip, scheduled for Jan. 22, if the government remained closed.