Summary

Every day, Americans benefit from public structures that contribute to our quality of life. When we walk into a clean, well-maintained post office; drive on federal highways; send our kids to school knowing they’ll get a hot lunch; or call the Social Security benefits office with a question, we see our federal tax dollars at work, providing public services we rely on.

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What most Americans don’t know is that many of the workers keeping our nation humming are paid low wages, earning barely enough to afford essentials like food, health care, utilities and rent. Through federal contracts and other funding, our tax dollars are fueling the low-wage economy and exacerbating inequality. Hundreds of billions of dollars in federal contracts, grants, loans, concession agreements and property leases go to private companies that pay low wages, provide few benefits, and offer employees little opportunity to work their way into the middle class. At the same time, many of these companies are providing their executives with exorbitant compensation.

We find that nearly two million private sector employees working on behalf of America earn wages too low to support a family, making $12 or less per hour. This is more than the number of low-wage workers at Walmart and McDonalds combined.1 Yet, if anything, this figure underestimates the total number of poorly-paid workers funded by our tax dollars. Our analysis encompasses U.S. workers employed by government contractors, paid by federal health care spending, supported by Small Business Administration loans, working on federal construction grants, and maintaining buildings leased by the federal government. This encompasses the largest share of poorly-paid workers funded by our taxes. However, other streams of funding have yet to be analyzed. For example, loans and subsidies from the Department of Agriculture fund giant agribusinesses that employ more than a million farm workers, while grants from the Department of Education fund low-wage assistant teachers, bus monitors and cooks in Head Start and other programs. Due to lack of data, retail and food service workers for concessionaires of the National Parks Service and other federal agencies also fall outside our analysis.