The pushback against the job-creation initiatives in the stimulus drips with the right’s enduring faith in the private sector. Why should the government be in the business of creating jobs, say Michael Steele and other private-sector cheerleaders. For a more nuanced view of the promise and peril of government job creation, read this new analysis from the Economic Policy Institute on privatization in the federal workforce. The gap between government and private jobs ties into much broader issues. According to 2006 data, about 8 percent of federal employees earned wages within the poverty threshold (estimated at $9.91 per hour). But a full quarter of private-sector employees worked for poverty wages. And the disparity is starker in light of other benefits.

“That is a stark difference; the private sector is three times as likely to employ workers with poverty threshold wages…. "Furthermore, federal employees who do earn less than the poverty threshold wage are much more likely than private sector employees to have employer-sponsored health insurance or retirement plans… "In 2006, 42% of low-wage federal employees had full or partial health coverage and 38% had a retirement plan. This contrasts sharply with private-sector low-wage workers. Only 25% had full or partial health coverage, and 14% had a retirement plan."

The contrast grows still more complex when you realize who makes up these workforces. Some 17 percent of federal workers are Black, compared to 11 percent of private-sector workers. (Latinos, however, have higher representation in the private-sector). So in this corner of the labor force that seems more resistant to the economy’s race to the bottom, the Black community has an especially significant stake. On the other hand, in a parallel with the private sector, people of color factor relatively prominently in the poverty-wage subset: 27 percent of the poverty-threshold federal workers are Black, 13 percent Latino. The crux of the report is the potential impact of contracting out federal jobs to the private sector–the kind of outsourcing that is typically billed as “cost-cutting.” Well, paying more workers poverty wages certainly is one way to reduce overhead:

“In 2006, one in five federal contract workers was paid less than a poverty threshold wage. While the percent of contract workers earning below poverty threshold wages is lower than in the private sector as a whole, it is more than double the number in the federal workforce and indicates that contracting out has a depressing effect on the incomes and labor standards of people who do work for the U.S. government.”

EPI recommends amending the process of awarding contracts to ensure equitable wage levels, “so that taxpayer funds are not used to create an ever larger workforce that is unable to escape poverty and support a decent standard of living.” It’s also worth noting that the Small Business Administration has guidelines for providing federal contracts to minority-owned businesses, but the government has in recent years opted to use this leverage rather… gently. With Washington poised to dramatically expand its role as an engine of job creation, how it confronts the questions of wage and racial equity will be key in making sure the government is actually part of the solution this time around.