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Wage Hike Ordered for U.S. Contractors

Wednesday, January 29, 2014

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Employees of federal contractors will see an increase in their minimum hourly pay to $10.10, under a new Executive Order signed by President Obama.

The White House released a Fact Sheet: Opportunity for All—Rewarding Hard Work announcing the Executive Order on Tuesday (Jan. 28), several hours before Obama announced it himself during the State of the Union Address.

The order covers workers performing services or construction who are getting paid less than $10.10 an hour.

Obama State of the Union

President Obama issued an Executive Order to raise the minimum wage for federal contractors' employees. He vowed to work with Congress to bring the same rate to the rest of the country.

The current federal minimum wage is $7.25, the level it has been at since July 24, 2009.

New Contracts

The increase will take effect with new contracts after the effective date of the order, so contractors will have time to prepare and price their bids accordingly, the Fact Sheet stated.

"The President has embraced the idea in the past that he can use his authority as President and the powers available to the President to advance his agenda on behalf of the American people," White House Press Secretary Jay Carney said at a briefing Monday (Jan. 27). 

A Bill for the Rest of Us

Obama said he also planned to work with Congress to pass a minimum wage bill for the rest of the country.

Sen. Tom Harkin (D-IA) and Rep. George Miller (D-CA) introduced the Fair Minimum Wage Act of 2013 (H.R. 1010 and S. 460) last March. The bill, H.R. 3746, was referred Dec. 12 to the House Committee on Education and the Workforce.

minimum wage increase
©iStock / sykono

The real value of today's minimum wage is about the same as in the 1950s, the White House said.

"The President is using his executive authority to lead by example, and will continue to work with Congress to finish the job for all Americans by passing the Harkin-Miller bill," the Fact Sheet said.

The bill would raise the federal minimum wage in stages until it hits $10.10 and index it to inflation after that; it would also raise minimum wage for tipped workers for the first time in 20 years.

According to the White House, low wages are bad for business because they lower morale, encourage low productivity, and lead to frequent turnover.

Real Value of Wages

The real value of today's minimum wage is about the same as it was in the 1950s, although the average  American family income has doubled since then, the White House said. Currently, a full-time minimum-wage worker makes $14,500 a year.

Minimum wage has been increased 22 times since it was first established in 1938.

On Jan. 1, 13 states raised minimum wage. Twenty-one states now pay workers more than the federal minimum wage.


Tagged categories: Construction; Contractors; Economy; Government; Government contracts; President Obama; Program/Project Management; Workers

Comment from William Gusnard, (1/29/2014, 4:51 AM)

Here is my take on it - Executive Order is simply a way to bypass the checks and balances in the government and a new way to lower the earning power of the middle class. To get pay raises based on the inflation index - what a novel idea. I wish that my company thought of that. Oh right, that would raise the cost of the services that we provide for people and if they could not afford it, they would just not but it. I work really hard and have had great work reviews for the past eight years but my total pay has gone up just a little more than 5% in that time frame. My insurance costs alone go up more every year than my pay does. This means that my erning level has gone. What do I do - I just buck and do not buy stuff that is not critical. My kids do not have cell phones because we cannot afford them, yet I see people working at McDonald's with the latest Iphone. I guess the latest phone is more important than getting medical insurnace or eating.

Comment from Meg Skinitis, (1/29/2014, 10:13 AM)

I have yet to know a Federal Contractor that pays below the $10 mark... maybe someone didn't tell "OBAMA" again! Federal Contractors are a motley crew who are responsible for thousands of jobs. It's the bloody insurance rates, WC and other expenses that have gone through the roof. In the end, we shrug our shoulders and are forced to pass it off to the customer - that being "ourselves as taxpayers". These schemes become worthless since they are implemented by "le Pen" aka executive order. Literally they are written in water. All this from an individual who has never run a payroll in his whole entire life. As with William's comment, I commend him for his ethical core and staying the course. Your children William are better off without the cellphone.

Comment from Dan Chute, (1/29/2014, 10:35 AM)

If I understand this correctly, this is an order to prohibit employers from hiring unskilled entry-level employees unless they provide them with a 39 percent pay raise, while the remainder of the employees see that money taken out of their checks in order to win competitively-bid new work. Ouch. Seems like that's a "Lose-Lose" proposition that would diminish incentive to develop productive skills that provide better value in a competitive job market -- with the dual penalty of providing an obstacle to first entry into the labor force to develop the marketable skills. Since 1938, "Minimum Wage" rules have had an ugly history presented with good intentions that don't deliver the promised result. They are successful in getting applause and votes.

Comment from Jim Johnson, (1/29/2014, 11:03 AM)

Ahh...just another Illegal Unconstitutional executive order. It is not a matter of if the minimum wage is good or bad, it is a matter of the order itself being ILLEGAL and absolutely no one should comply. When Tyranny raises its ugly head it is an obligation of every American to stand against it. In actuality, I am not aware of anyone on a government contract job that is making under $10 an hour, but there may be some.

Comment from Jim Johnson, (1/29/2014, 11:13 AM)

US Constitution - Article 1, Section 1. All legislative powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives. - So where do Executive Orders get their authority to make or alter law? No Where! They may not make or alter law at all, because if they did they would be unconstitutional. Executive Orders may direct agencies as to how they are to carry out their duties, but they may not make or alter law in any manner as the Constitution gives ALL legislative powers to the Congress.

Comment from Mark Anater, (1/29/2014, 11:26 AM)

As usual there is a lot of screaming here about "illegal" executive action. Obama's order does not raise the minimum wage; that would require an act of Congress. It only affects federal contractors, and the executive clearly has the authority to set conditions for government contracts. Congress granted that authority when the various agencies of the executive branch were created. Argue against the raise if you will, but don't scream about tyranny and rule of law if you don't know what that means.

Comment from Peter Rushen, (1/29/2014, 5:29 PM)

FAct the countries with the highest standards of living and best conditions for workers and functional welfare and health care systems are high wage countries. The higher a persons wage the more money they have to distribute throughout the broader economy and they pay more tax which supports quality services and infrastructure improvements that benefit business and the community.

Comment from Peter Rushen, (1/29/2014, 5:47 PM)

From the outside looking in it is sad to see how reflexively divisive all aspects of US policy making have become.As an Australian,I used to admire the way America got behind their leadership for the common good, now I am bewildered by the rank vitriolic partisanship that appears to be crippling your political system and stymieing necessary and reasonable reforms and progress on any and every issue. It appears that knee-jerk opposition to anything Obama is one half of the political dialogue and that a large percentage of the electorate are prepared to enthusiastically drag their country down (backwards)provided they can take Obama with them. Perversely, for "freedom loving" people, many Americans seem unable to accept their democratically (twice) elected leadership and get behind their best effort to keep the US moving forward into the future. It is very sad and totally bewildering.

Comment from William Cornelius, (1/30/2014, 8:45 AM)

Peter Rushen, I think you may be romanticizing our political past. The last widely accepted president I remember was Ike. LBJ and Nixon about tore the country in half. Reagan was controversial, Clinton was divisive in an artificial talk-radio way, and Bush II was constantly trashed. Kennedy, Carter and Bush I had their detractors but not to the extent of the others. I'm afraid Obama fits right with most of the Viet Nam (and post Viet Nam) presidents, including those elected twice. Understand that I'm am not supporting or condemning any president or political group, but just commenting on what I've seen.

Comment from Jim Johnson, (1/30/2014, 1:50 PM)

Mark, that is part of the problem. Congress has no right to give their authority away to any agency. Show me where the Constitution gives Congress the ability to transfer their authority/responsibility onto others.

Comment from Billy Russell, (1/31/2014, 5:29 AM)

10.10 an hour for NO skill level required, How about a Bill to raise what you Bring to the Table, work hard and advance yourself or Move on go back to school get a higher education and get a better job. Hope & Change policy's EBT cards, Free health care , indefinitely extend your unemployment because Hope & Change Economic policies are in fact a disaster, Lowering the expectation of people instead of Raising the Bar, more money for NO skill required, Hope & Change at work in America for 2 more years, We want to start a company not get a job, we want to buy our own food not on your EBT card, we want to make the decision in our lives not have the government sell us Hope & change Bull%$#!

Comment from Robert Bullard, (2/3/2014, 9:34 AM)

I paid to start $10 per hour 30 years ago to unskilled workers. I had intense supervision to make it work AND I told them up front, "If you show me you are worth it, you stay at $10; if not, your wage drops at $0.50 hour until you are worth it or you quit. About 1 of 5 stayed at $10 per hour; 2 of 5 dropped, then came back; 1 of 5 settled in at about $7.50 per hour; 1 quit or was fired. Today, the starting number is $22.50. You can not insult the value of a person's best efforts to support himself and his family by stacking the fundamentals against him. $22.50 is rock bottom for a living wage in Central Florida. But you do also have to make your business work.

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