President hikes minimum wage for federal contractors

Jennifer Ffrench-Parker | 2/14/2014, 4:22 a.m.
The minimum wage for federal contract workers will be $10.10 an hour effective Jan. 1, 2015.
President Obama

The minimum wage for federal contract workers will be $10.10 an hour effective Jan. 1, 2015.

Making good on his State of the Union address promise, President Barack Obama signed the Executive Order on Feb. 12, and called on Congress to pass the Harkin-Miller Bill to make the minimum wage $10.10 for all workers.

The new rate is a $2.85 increase in the federal minimum wage of $7.25.

It will apply to new contracts and replacements for expiring contracts, the White House said in a statement Wednesday.

“The the new minimum wage will benefit hundreds of thousands of people working under contracts with the federal government who are making less than $10.10 an hour,” the administration said.

“It will also improve the value that taxpayers are getting from the federal government’s investment.”

The White House said that studies show that boosting low wages will reduce turnover and absenteeism, while also boosting morale and improving the incentives for workers, leading to higher productivity overall, lower turnover and absenteeism, and increased employee morale.

“Raising wages for those at the bottom will improve the quality and efficiency of services provided to the government,” the statement said.

In his Jan. 28 State of the Union Address, President Obama pledged to both take executive action wherever he can, and work with Congress to increase opportunity for all Americans.

“Consistent with that pledge, the President will continue to work with Congress to finish the job to raise the minimum wage for all Americans and pass the Harkin-Miller bill so that all workers can be paid at least a $10.10 minimum wage,” the White House statement said.

Congress last increased the minimum wage in 2007 from $5.85 to $6.55 in July 2008, and to the current $7.25 in July 2009.

Adjusted for inflation, the White House said the real value of minimum wage is roughly the same today as the $.75 cents it was in the 1950s.

Today, a full-time minimum wage worker makes $14,500 a year. After accounting for programs like the Earned Income Tax Credit, a family of four supported by a minimum wage worker still ends up living below the poverty line.

Disabled gets same rate

The new minimum wage for federal contracted employees applies to hundreds of thousand of people, including nursing assistants providing care to war veterans at nursing homes; concessions workers in National Parks; people serving food to US troops; and individuals with disabilities working to maintain the grounds on military bases.

Obama’s executive order also includes provisions to ensure that federal contracted workers paid by a combination of tips and base wage, earn at least $10.10 overall.

The White House said that employers are currently required to pay a minimum base wage of $2.13 per hour, a base that is more than 20 years old, and if a worker’s tips do not add up to the minimum wage, the employer must make up the difference.

“Under the executive order, employers are required to ensure that tipped workers earn at least $10.10 an hour,” the statement said.