Coalition Calls for Preferential Treatment for Federal Contractors with Low Pay Ratio

Americans for Financial Reform is urging the Biden administration to use the federal procurement process to pursue policy reforms to “incentivize corporations to narrow their pay gaps and respect worker rights.” Americans for Financial Reform is a progressive non-profit coalition of more than 200 civil rights, consumer, labor, business, investor, faith-based, and civic and community groups.

In a letter, the Coalition calls on the administration to use the procurement process to introduce new federal contracting standards to narrow the gap between CEO and worker pay, reduce stock buybacks and to support workers’ collective bargaining and federal contractor neutrality in union organizing campaigns. Among the recommendations, the Coalition suggests that companies with “reasonable gaps between CEO and worker pay” and those that do not engage in stock buybacks should be given preferential treatment in federal procurement bids. In addition, the Coalition expressed support for the recently issued proposed rule for implementing President Biden’s executive order requiring the use of project labor agreements (PLAs) for large-scale federal construction projects. 

Efforts to use the federal procurement process to implement labor and employment reforms are not unique to Americans for Financial Reform. Historically, legislative and regulatory proposals have been introduced to address CEO pay ratio, restrict stock buybacks and to encourage worker organizing. We can expect that Democrats will once again introduce these proposals in the next Congress. However, if Republicans gain majority in next week’s mid-term elections, such proposals will not gain the necessary votes for passage in the 118^th Congress. As a result, companies should anticipate that there will be an increase in calls to the administration from advocates to use the regulatory process/ agencies to pursue these types of policy initiatives. The Biden administration will be supportive of using the procurement process to pursue these reforms.