Sweatshop Army
Why does the Pentagon use low-road companies to feed
and clothe our troops?
David Moberg
The American Prospect
September 2, 2010
http://www.prospect.org/cs/articles?article=sweatshop_army


During a 13-month tour in Iraq with her National Guard
unit, Amber Hicks ate her share of the military rations
known as "meals ready to eat," or MREs. Then, as chance
would have it, she returned to her hometown of
Cincinnati and found a job in the Wornick Company's
factory -- making those familiar MREs.

Most of her fellow workers were immigrants -- African,
Mexican, Vietnamese, and Cambodian -- and most of them
made less than $10 an hour, with very few able to pay
for the company's health insurance. The work was fast-
paced and stressful, and conditions were worsened by
frequent forced hours of overtime work, which caused
day-care problems -- even job loss -- for workers with
children. The pressures also likely contributed to the
company's above-average injury rates. And on top of
those problems, Hicks says, "there was a lot of
favoritism from the 'good old boy' gang that ran the
plant. It wasn't what you know but who you know, for
getting promotions."

Every year the federal government spends half a trillion
dollars on contracts for goods and services from private
companies like Wornick. The total workforce of those
companies -- including workers not on federal contracts
-- accounts for 22 percent of American workers. And
according to David Madland, director of the American
Worker Project at the Center for American Progress, the
military spends 69 percent of those contract dollars.

The military, then, through its procurement process has
a huge potential influence, directly and indirectly, on
the conditions of work and the rights of workers in this
country. Unfortunately, all too often the work on
military contracts is ill-paid and abusive, just as it
is at Wornick, and not an expression of government's
stated social policy, such as the 1935 Wagner Act's
commitment to encourage collective bargaining.

In 2008, for example, the Wornick plant was abuzz with
talk of forming a union with the United Food and
Commercial Workers. The company, which earns about half
its revenue from government contracts, was also going
through bankruptcy. A group of its creditors, including
the publicly bailed-out insurance giant American
International Group, took control shortly afterward and
received more than $6.5 million in state and local
financial assistance.

Wornick's management responded to its employees'
organizing with a classic anti-union campaign:
supervisors meeting individually with workers to
discourage pro-union sentiments, calling forced group
anti-union meetings, harassing union sympathizers,
posting flyers about closed unionized automobile plants,
providing pizza for anti-union workers (whose names
supervisors collected on petitions), distributing "no
union" T-shirts, and threatening to move the factory if
the workers unionized.

Hicks and her uncle, Kevin Phillips, were among the
union stalwarts. Then late last October, Wornick fired
Hicks, who was pregnant at the time, citing errors in
her paperwork on monitoring operations, accusations she
contested. The National Labor Relations Board did not
restore her job, but the rest of the workers interpreted
her firing as retaliation for union support.

"She fought for her country in Iraq. She was well-liked,
did her work well. Are you serious?" Phillips recounts
angrily. Workers, he says, concluded: "'Damn, if they'll
fire this nine-month pregnant woman, they'll fire me.'
They were scared. We were so close [to winning union
recognition], but that turned everything around." Still
unemployed nine months later, Hicks was caring for her
son and planning to return to college, but the union
drive is now on the back burner.

***

Since the presidency of Martin Van Buren, the federal
government has set standards for work under public
contracts that go beyond the basic rights guaranteed all
workers. In the 1930s and 1960s, for example, Congress
passed procurement laws that guarantee many construction
and service workers are paid the prevailing wage for
their area and occupation. That requirement prevents
government contracts from driving down wage levels and
sets a floor for government contract workers, unionized
or not. Union organizing can raise that floor. And
Presidents Franklin D. Roosevelt, John F. Kennedy, and
Lyndon B. Johnson, using their executive power, issued
orders requiring affirmative action by contractors that
have had lasting effects.

Under George W. Bush, as government privatized more
functions, federal contracting increased by about half,
according to the Economic Policy Institute. The EPI also
estimates that nearly one-fifth of federal contracted
workers did not earn enough to raise a family of four
above the poverty line. Federal prevailing-wage rules
apply to only a third of contract workers, and in 2004,
investigations by the Department of Labor found that 80
percent of service contractors failed to comply with the
law.

Military-apparel contractors must operate in the U.S. or
its territories (though insiders say the rule is often
violated). But there is no prevailing-wage standard for
the 50,000 workers who make $4 billion a year worth of
uniforms, protective vests, packs, and related apparel
for the military. A UNITE HERE! union survey in 2006
found that the average military -- contract sewing-
machine operator earned $6.55 an hour -- wages that were
not only below poverty but also below the median sewing
wage in the industry. Higher minimum wages have since
helped, but overall "conditions have not gotten better,"
says Edgar Romney, secretary-treasurer for Workers
United and a vice president of the -Service Employees
International Union.

Until three years ago, Michael Bianco, Inc., operated a
factory that made military backpacks and vests in New
Bedford, Massachusetts, that a U.S. attorney called a
sweatshop with "deplorable" conditions for its workforce
of mainly undocumented immigrant workers. The company
docked workers heavily for minor infractions ($20 for
spending more than two minutes in the restroom, where
the company limited toilet paper), cheated them of
overtime pay, locked fire exits, and provided no health
insurance. Workers relied on food stamps, charity care,
and whatever public assistance they could get. A
military inspector worked in the plant but only
monitored product quality, not the rampant labor-law
abuses around him.

Other contractors took over the plant, but conditions
remained virtually as bad until the latest owner moved
work to Puerto Rico and shut down the plant. Then, at
the urging of Workers United/SEIU, Mitch Cahn, president
of Unionwear, opened a new plant nearby with plans to
hire many of the displaced workers. Applying "lean
manufacturing" principles and embracing the union as
good for both his workers and his business, Cahn pays
his workers $12 an hour (plus $4 to $5 per hour for
benefits) and still beats out his low-road competition.
The reason: Workers are very productive and committed to
their jobs. Competing against anti-union sweatshops, his
company won about $5 million in military contracts and
subcontracts this year, up from nothing three years ago.

Unlike Cahn, the biggest military-apparel contractor,
Propper International, has all eight of its factories
and 3,000 production workers in Puerto Rico. It pays
near the minimum wage and, according to a lawsuit filed
by workers, fails to pay legally required sick and
vacation days. Also, says Workers United organizing
director Liz Gres, "from the get-go, they've kicked up
an anti-union campaign, threatening to close the plant,
retaliating against supporters."

For example, Albert Torres, one of the most vocal union
supporters in Propper's Adjuntas plant, was not called
back from lay-off this summer when workers in his job
category with less experience were recalled. "The
biggest thing [workers] fear is they'll close the
factory," Torres says. "There are a lot of older ladies
who work there, and the economy is not so good. So they
remain quiet."

***

Proponents of a high-road procurement policy -- which
would apply across the federal government, not just to
military contracting -- argue that the government should
certainly not be rewarding corporate lawbreakers or
driving down working conditions. Instead it should be
encouraging higher pay and better benefits.

When government picks low-road contractors, it often
ends up paying more anyway through food stamps,
Medicaid, children's health subsidies, and much more.
Those subsidies for bad contractors in the military --
garment industry alone cost $300,000 for a typical
factory or $45 million a year for that industry, union
researchers estimate, and $16 billion for all federal
contractors. Also, there's evidence -- much from state
and local experience -- that high contractor standards
improve quality of contracted goods and services,
attract more bidders, and do not raise overall expenses
significantly.

"It's not just about worker treatment but about fairness
to taxpayers," says Rep. Patrick Murphy, a Democrat from
Pennsylvania, who requested a Government Accountability
Office investigation of federal contracting. While
stopping a "race to the bottom," he adds, government
needs to end a system where "taxpayers are essentially
charged twice" for low-road contractors.

High-road proponents want the federal government to
screen out bad companies and develop an employment --
standards scoring system. With such a scoring system,
agencies would provide credits for good behavior on most
government bids. It would include rating whether the
company as a whole -- not just the unit bidding for the
contract -- provides a livable wage, quality and
affordable health insurance, adequate and affordable
pensions, and leave for family and medical needs. In
addition to creating an office in the Department of
Labor to monitor compliance, the government would also
place a procurement -- standards representative in each
federal agency (much as each agency now has a small-
business monitor).

The proposal drew predictable fire from contractors,
business lobbies, and Republicans. But there's also some
resistance from budget hawks and procurement officers
within government, who worry about costs (although
accounting for the full cost and value would make high-
road standards look good) or about burdening the
procurement process with more requirements.

If the United States had a higher minimum wage,
widespread unionization, universal health insurance,
more generous Social Security, and stronger, more
vigorously enforced fair-labor standards, then high-road
contracting rules might be less needed. But in fact,
other advanced countries that have better general labor
standards often have stronger contracting rules to
protect workers as well, far more ambitious than
anything now being considered in the U.S.

Australia, for example, now uses a procurement system
based on "whole of life" value for money spent, not just
the lowest immediate price for the good being purchased.
And government -- even through its contracting -- aims
to be a model employer. The policy requires compliance
with Australia's 2009 Fair Work Act that bolsters
collective bargaining where it exists, requires
employers to respect freedom of association, and
directly assists workers who have historically had
difficulty organizing to form unions and bargain.

The proposed high-road standards in the U.S. -- which
many observers believe the administration will adopt in
a weakened form -- do not address explicitly the right
of workers to unionize. Besides raising the legal issues
of labor-law preemption, proponents believed that
specifically protecting unionization at government
contractors, as Australia does, would stir up a hornets'
nest of opposition. Still, business and conservatives
attacked even the stripped-down high-road plan as a
union payback.

***

Ultimately, if government intends to act as a model
employer, it must also nurture collective bargaining.
Consider the case of U.S. Foodservice, a 25,000-employee
national distributor of food to institutions owned by
two private-equity firms. It received contracts of
around $2 billion over the past decade, most from the
military, while systematically using dirty tactics to
fight both existing unions and workers trying to
organize. In Phoenix, Arizona, during 2008, workers
narrowly lost a vote for recognition of the Teamsters
after a vicious management attack. Under pressure from
the National Labor Relations Board for its multiple,
serious unfair labor practices, USF agreed to recognize
the union and after long delays, is now negotiating a
first contract with its employees. By doing business
with such a labor scofflaw, the government makes a
mockery of its own policies.

President Barack Obama at times strongly endorses
unions, and early on he restored the Clinton
administration's policy of prohibiting contractors from
billing the government for anti-union actions. But he
has done virtually nothing to help workers organize,
especially with temporary suspension of efforts to pass
the Employee Free Choice Act. Some labor lawyers and
activists argue that Obama could adopt a government
strategy to support collective bargaining in two key
sectors of military contracting -- food supplies and
apparel.

Prevailing court doctrine does not permit government to
use contracting to directly achieve regulatory
objectives. But courts have allowed government broad
latitude to assure supply. So purchasing officials could
assess risk of labor unrest before contracting; then if
there is a risk, require contractors to reach agreement
with a union that represents or seeks to represent the
workers to maintain "labor peace," that is, keep workers
from striking, picketing, or disrupting production.
Obviously, if companies want a contract, it's in their
interest to reach a settlement if workers choose to
unionize.

During the two World Wars, unions made a trade-off of
labor peace for easier organization of workers (though
not without controversy about surrendering workers'
rights). And there are numerous state and local labor
peace ordinances and orders. For example, New Jersey
requires any uniform vendor selling to the state to
agree to be neutral and recognize the union by checking
membership cards. The military has the kind of
proprietary interest in dependable supply of food and
apparel making it likely to avoid preemption problems.

What would happen if the military contracts for food and
apparel operated under these two procurement rules --
the first favoring high-road employers, the second
requiring labor peace agreements with current or
prospective unions? "The people who own apparel
companies will make less money, because their employees
will be making more money," says company owner Mitch
Cahn. Prices probably wouldn't rise: "Our unit costs
continue to go down as pay goes up and so does
productivity," Cahn says. But quality would: "When
workers are happy, they're more productive and have a
positive view of clients," he says. "They produce better
quality and more predictably."

Cahn has no doubts about his pro-union, but lean and
efficient, approach to producing for the government. "I
wouldn't do it any other way," he says. And that's what
Obama, through military-contracting rules, should say as
well.

_____________________________________________

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