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Working In These Times

Wednesday, Feb 12, 2014, 7:00 pm

It’s Official: Obama Signs Minimum Wage Hike for Some Federal Contract Workers

BY Bruce Vail

On February 12, in the East Room of the White House, President Barack Obama signs an executive order raising the minimum wage to $10.10 for new federal contracts. (Mandel Ngan/AFP/Getty Images)  

Today, President Barack Obama honored his promise from last month’s State of the Union address to raise the minimum wage for some workers indirectly employed by the federal government. In a new executive order, he raised the minimum wage from $7.25 to $10.10 an hour, effective Jan. 1, 2015. The White House estimates the order will affect hundreds of thousands of workers employed by private companies with government contracts. 

“Nobody who works full time should have to live in poverty,” Obama said during a signing ceremony at the White House. He used the ceremony to repeat his calls for Congress to raise the federal minimum wage for all workers and for state and local governments and private businesses to also act to boost the income of low-wage workers.

Labor groups and union supporters reported they were pleased with the final shape of the executive order. 

“It’s more expansive than a lot of people were expecting, so yes, we are very pleased,” said Amy Traub, senior policy analyst with the pro-labor think tank Demos. Demos had lobbied the White House for the broadest possible language in the executive order. Some advocates feared that the order could have been worded narrowly, in a way that would leave out food concessions workers at national parks and elsewhere. Traub was pleased to see these  workers included, as well as tipped workers—who currently receive a subminimum wage—and workers with disabilities, whom the Secretary of Labor initially said would be excluded.

Demos agrees with the White House’s estimate that the order will directly affect hundreds of thousands of workers, though Traub notes that it may take two to three years. “It doesn’t immediately affect contracts that are already in place, but will affect those contracts when it comes time for them to be renewed. … So that’s a good start,” says Traub.

“Today’s action by the president is a welcome step toward raising wages for employees who work for federal contractors,” agreed SEIU President Mary Kay Henry in a formal statement.

She added, however, that while “this executive order represents good progress, more can be done to reform the system that the federal government uses to hire outside contractors. Too many companies that have contacts with the federal government habitually violate federal labor laws by allowing unsafe working conditions, withholding pay from their employees and otherwise not acting in the taxpayers’ best interests. We hope the president will consider taking additional action that prevents companies that break the law from receiving federal contract.”

Henry’s point is well-taken, says Traub, who believes “the logical next step” for the White House is to issue executive orders cracking down on law-breaking by contractors. Stricter enforcement of existing contracting regulations will effectively raise wages among a significant portion of the estimated total of 2.5 million federal contract workers, she says. 

Possible steps to better enforcement were outlined in a lengthy report issued in December by the Senate Health, Education, Labor and Pensions (HELP) Committee, chaired by Tom Harkin (D-Iowa). SEIU Director of Government Relations Peter Colavito tells Working In These Times said "the Harkin report was very instructive" in laying out actions that Obama could take to reduce "rampant wage theft and heath and safety issues" by federal contractors. There is no evidence that the White House seriously considered including these measures in the new executive order, he says, but "they've said they are open" to additional executive orders in the future on this issue. HELP Press Secretary Allison Preiss adds that some Committee members hope the White House will do so separately later this year.

Harkin praised the executive order and, like Obama, linked it to congressional legislation to raise the overall federal minimum wage, which Harkin is sponsoring.

In a Tuesday press release, Harkin stated: “This executive order is especially important because it brings us one step closer to ensuring that every worker gets a fair day’s pay for a hard day’s work.  We must continue our work by passing my bill...to raise the federal minimum wage to $10.10. Congress can help 28 million hardworking Americans and their families while also giving the economy a critical boost.”

Since the State of the Union speech on January 28, it has become increasingly clear that Obama’s promise to sign the executive order is part of a broader strategy by Democratic Party operatives to use the minimum wage issue as a way to build electoral support in the 2014 congressional elections. Analysts appearing on a MSNBC television program early last month  predicted the Democratic Party would be making the minimum wage a major theme of its electioneering this year.

Further down the road, there’s cause for the $10.10 minimum wage for federal contractors to become an issue in the 2016 election: An executive order signed by one president can be immediately reversed by another.

Bruce Vail is a Baltimore-based freelance writer with decades of experience covering labor and business stories for newspapers, magazines and new media. He was a reporter for Bloomberg BNA's Daily Labor Report, covering collective bargaining issues in a wide range of industries, and a maritime industry reporter and editor for the Journal of Commerce, serving both in the newspaper's New York City headquarters and in the Washington, D.C. bureau.

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