Obama to Raise Minimum Wage for Federal Contractors

By Albert Lin


In his State of the Union address on Tuesday night, President Obama announced that he plans to sign an executive order to raise the minimum wage for federal contract employees to $10.10 per hour, the next step in what he hopes will be a successful movement to raise the federal minimum wage to the same amount.

He told the story of a pizzeria owner in Minneapolis, John Sorrano, who recently decided to pay his employees $10 an hour. Obama mentioned that in the last year, five states have raised the minimum wage within their borders. “To every mayor, governor, and state legislator in America, I say, you don’t have to wait for Congress to act; Americans will support you if you take this on,” the President said. “And as a chief executive, I intend to lead by example. Profitable corporations like Costco see higher wages as the smart way to boost productivity and reduce turnover. We should too.In the coming weeks, I will issue an Executive Order requiring federal contractors to pay their federally funded employees a fair wage of at least $10.10 an hourbecause if you cook our troops’ meals or wash their dishes, you shouldn’t have to live in poverty.”

The executive order has its limits, however: It is not retroactive and will apply only to contracts signed after Obama’s order takes effect. Moreover, it will apply to renewed or renegotiated contracts only if other terms are changed.

Rather than the estimated 21 million Americans who would see their paychecks boosted if the federal minimum wage were increased, Obama’s executive order at most is expected to affect several hundred thousand workers.

Obama decided to bypass the legislative branch after calling on Congress in his 2013 State of the Union address to increase the federal minimum wage and seeing that plea go nowhere. He also threw his support behind a bill to increase the federal minimum wage. That billthe Fair Minimum Wage Act of 2013, sponsored by Democrats Tom Harkin (Iowa Senator) and George Miller (California Congressman)would increase the federal minimum wage from its present level of $7.25 to $10.10 in three steps, and then provide for automatic annual increases tied to inflation.

“This will help families. It will give businesses customers with more money to spend.It doesn’t involve any new bureaucratic program,” Obama said of the bill. “So join the rest of the country.Say yes.Give America a raise.”

The President’s full remarks regarding the minimum wage are below.

The executive order is part of a broader White House strategy to begin to take action to move forward programsincluding job training and assistance to the long-term unemployedthat Congress has been unable to improve.

“You can be sure that the President fully intends to use his executive authority to use the unique powers of the office to make progress on economic opportunity, to make progress in the areas that he believes are so important to further economic growth and further job creation,” White House Press Secretary Jay Carney said on Monday.

Republicans obviously are not happy about this development. Speaker of the House John Boehner told reporters, “This idea that he’s just going to go it alone, I have to remind him we do have a Constitution. And the Congress writes the laws, and the President’s job is to execute the laws faithfully. And if he tries to ignore this he’s going to run into a brick wall. We’re just not going to sit here and let the President trample all over us.”

When adjusted for inflation to 2012 dollars, the federal minimum wage peaked in 1968 at the equivalent of $10.56 an hour. It has not been above $8 an hour since 1983, even dropping below $6 an hour (in adjusted dollars) in 2007. Twenty-one states currently have minimum wages higher than the federal level of $7.25, which was reached in 2009.

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