Federal Contract Workers Face Wage Rollback: SEIU Fights Back!

WASHINGTON, DC: The Service Employees International Union (SEIU) President April Verrett has issued a scathing response to the President’s rescission of a Biden-era executive order that raised the minimum wage floor to $15 an hour with cost of living adjustments for more than 700,000 federal government contract workers. This new executive order opens the door to roll back wages for new or renewed members of this workforce largely represented by women and people of color.

“THIS IS AN OUTRAGE!” Verrett exclaimed. “This administration promised jobs with higher wages and a better economy for working families. Instead, they’re making life harder for hundreds of thousands of hard-working Americans who keep our government running behind the scenes. These courageous federally contracted workers are already doing their jobs in an extremely chaotic environment marred by confusion and intimidation from DOGE. They don’t deserve to have their essential work further devalued.”

The rescission of this executive order could have significant impacts on the economic stability and morale of the 700,000 workers affected, particularly those who are women and people of color. According to the information provided, the Biden administration's support for worker organizing and the appointment of strong worker advocates in critical agencies like the National Labor Relations Board (NLRB) have signaled a powerful push by workers to improve wages, working conditions, and workplace rights. However, the rescission of this executive order could reverse these gains, leading to potential economic instability for these workers.

For instance, the data from the Bureau of Labor Statistics (BLS) indicates that as of 2024, the share of workers represented by a union was 11.1%, while the share of workers who were union members was 9.9%. Both measures are useful, but because all workers in a bargaining unit get the benefit of being represented by the union, union representation is the more relevant statistic when considering the impact of unionization on labor market outcomes. Therefore, the rescission of the executive order could lead to a decline in union representation, which would disproportionately affect women and people of color, who have higher unionization rates. For example, in 2024, Black workers continued to have the highest unionization rates at 13.2%, compared with 10.8% for white workers, 9.8% for Asian workers, and 9.7% for Hispanic workers. Workers of color, taken together, saw an increase in unionization levels of 68,000 in 2024, while white, non-Hispanic workers saw a decrease of 240,000. This data suggests that the rescission of the executive order could lead to a decline in unionization rates for workers of color, which would have a negative impact on their economic stability and morale.

Furthermore, the rescission of the executive order could also lead to a decline in the number of workers who are covered by a union contract. In 2024, 16.0 million workers in the United States were represented by a union, which was 11.1% of all wage and salary workers. However, that 16.0 million was a drop of 170,000 from 2023, and the 11.1% unionization rate was a tick down from 11.2%. This data suggests that the rescission of the executive order could lead to a further decline in the number of workers who are covered by a union contract, which would have a negative impact on the economic stability and morale of federal government contract workers, particularly those who are women and people of color.

The potential long-term economic consequences of rolling back the minimum wage for federal contract workers could be severe, affecting broader economic indicators such as inflation and unemployment. Here are some key points to consider:

1. Impact on Consumer Spending and Aggregate Demand:

- A reduction in the minimum wage would likely decrease the income of low-wage workers, who are more likely to spend a higher proportion of their earnings. This could lead to a decrease in consumer spending, which is a significant component of aggregate demand. As noted in the materials, "Low-income workers are likely to have a higher marginal propensity to consume (in other words they spend high % of extra pay)." A decrease in consumer spending could potentially slow down economic growth.

2. Effect on Inflation:

- Lower wages for federal contract workers could reduce the overall cost of goods and services produced by these workers, potentially leading to lower prices. However, the impact on inflation would depend on various factors, including the overall demand for these goods and services. As the materials state, "Higher costs for firms, leading to wage-push inflation" could be mitigated if wages are reduced. However, if demand remains strong, firms might still pass on higher costs to consumers, maintaining inflationary pressures.

3. Unemployment and Labor Market Dynamics:

- A lower minimum wage could make it more attractive for employers to hire workers, potentially increasing employment in the short term. However, the long-term effects on unemployment are less clear. If the reduction in the minimum wage leads to a significant decrease in consumer spending and aggregate demand, it could result in job losses in other sectors of the economy. As the materials note, "If we assume labour markets are competitive and if we assume that a minimum wage does cause lower employment, then rising unemployment will have a negative impact on aggregate demand."

4. Income Inequality and Social Impact:

- Rolling back the minimum wage could exacerbate income inequality, as low-wage workers would see their purchasing power decrease. This could have broader social and economic consequences, including reduced consumer confidence and potential social unrest. The materials highlight that "Minimum wage laws form a cornerstone of labor economics, aimed at ensuring a basic standard of living for workers."

5. Impact on Federal Contractors:

- Federal contractors who rely on low-wage labor could see their costs decrease, potentially improving their profitability. However, this could also lead to a race to the bottom, where contractors compete on the basis of low wages rather than quality or innovation. As the materials note, "The federal government has placed a strong emphasis on AI, recognizing its potential to enhance efficiency across various agencies. AI is being leveraged to streamline bureaucratic processes in agencies like the Social Security Administration and the Department of Education, and contractors who can offer AI solutions are in high demand."

In summary, rolling back the minimum wage for federal contract workers could have complex and potentially negative long-term economic consequences, including reduced consumer spending, uncertain effects on inflation, and potential increases in unemployment. These effects would depend on various factors, including the overall demand for goods and services, the response of employers, and the broader economic context.

SEIU and other labor organizations might respond to an executive order that negatively impacts workers by employing several strategies to advocate for the affected workers and potentially reverse the decision. Here are some potential responses and strategies based on the information provided:

1. Public Awareness and Mobilization: SEIU and other labor organizations could launch public awareness campaigns to highlight the negative impacts of the executive order on workers. For instance, they could use data from the Bureau of Labor Statistics (BLS) to show how the order could lead to job losses or reduced wages. As mentioned, "60 million workers would join a union if they could," indicating a strong desire for better working conditions and wages. By mobilizing public support, these organizations could put pressure on policymakers to reconsider the order.

2. Legal Challenges: Labor organizations could challenge the executive order in court, arguing that it violates workers' rights or existing labor laws. For example, they could cite the National Labor Relations Act (NLRA) or other relevant legislation to support their case. The information provided mentions that "weaknesses in federal labor law have made it possible for employers to oppose unions," suggesting that legal challenges could be a viable strategy.

3. Lobbying and Advocacy: SEIU and other labor organizations could engage in lobbying efforts to advocate for the affected workers. They could meet with lawmakers, provide them with data and evidence of the order's negative impacts, and urge them to support legislation that reverses or mitigates the order's effects. For instance, they could use data from the Federal Reserve Bank of Atlanta to show how the order could exacerbate economic inequality or slow down economic recovery.

4. Grassroots Organizing: Labor organizations could engage in grassroots organizing efforts to build support for their cause. They could organize rallies, protests, and other events to raise awareness about the order's impacts and build a groundswell of support for reversing it. For example, they could use the data from the BLS to show how the order could lead to a decline in unionization rates, which are already at a low of 11.1% in 2024.

5. Media Outreach: SEIU and other labor organizations could engage in media outreach efforts to raise awareness about the order's impacts. They could use data and evidence to support their arguments and build public support for their cause. For instance, they could use data from the Bureau of Labor Statistics (BLS) to show how the order could lead to a decline in unionization rates, which are already at a low of 11.1% in 2024.

6. Partnerships and Coalitions: Labor organizations could form partnerships and coalitions with other groups that share their concerns about the executive order. For example, they could partner with community organizations, advocacy groups, and other stakeholders to build a broader coalition in support of reversing the order. The information provided mentions that "60 million workers would join a union if they could," indicating a strong desire for better working conditions and wages. By forming partnerships and coalitions, labor organizations could build a broader base of support for their cause.

In conclusion, SEIU and other labor organizations could employ a variety of strategies to advocate for the affected workers and potentially reverse the decision. By using data and evidence to support their arguments, they could build public support for their cause and put pressure on policymakers to reconsider the order.