President Obama’s latest executive action boosted the minimum wage for federal contractors, but the White House struggled to answer specific questions about how many employees will be affected and how government agencies can implement the pay raise without busting their budgets.
The increase, from $7.25 to $10.10, also is unlikely to change the larger dynamic as business groups, Republican lawmakers and others remain steadfast in their opposition to an across-the-board pay raise for all workers earning the minimum wage.
Those concerns aside, the White House pressed ahead Wednesday with a step designed to show the administration is ready to “lead by example” as it urges states, private companies and ultimately Congress to ensure every American employee is paid at least $10.10.
“Not only is it good for the economy, it’s the right thing to do. There’s a simple moral principal at stake: If you take responsibility, and you work as hard as these folks work, if you work full time, you shouldn’t be living in poverty. Not in America,” Mr. Obama said at the White House, just before signing the executive action. “So I’m going to keep doing whatever I can to raise working Americans’ wages. And I would ask any business leader out there, any governor, any mayor, any local leader listening, do what you can to raise your employees’ wages; to work to raise the wages of citizens in your jurisdiction. They’ll support these efforts.”
While the larger aim is clear, the White House was unable to provide key details about Wednesday’s step.
Labor Secretary Thomas Perez told reporters that the executive order, which will go into effect on Jan. 1, 2015, will benefit “hundreds of thousands of workers” doing business with the federal government, but could not offer a more precise figure.
Each federal contract after the start of next year will have to comply with the new wage requirement, and with that in mind, Mr. Perez said the number of contractors benefiting will rise over time.
“Some will benefit year one. More will benefit year two. Even more will benefit year three,” he said.
Also, he insisted the order won’t bust agency budgets even though some federal contractors will be taking home bigger paychecks.
“All federal agencies will be doing this within their existing budgets,” he said, adding that the federal government also will reap the rewards of happier, better-paid employees who therefore work harder and are more efficient.
Despite the administration’s prodding, minimum-wage hikes for the foreseeable future likely will be confined to federal contracts and efforts at the state level. Many Republicans in Congress oppose raising the national wage to $10.10, and powerful business groups such as the National Retail Federation, National Federal of Independent Business and others also are against the move.
Legislation has been introduced in Congress to raise the rate across the country, but its prospects appear dim right now.
For Democrats, however, talking about the minimum wage — and, they would argue, the subsequent problem of too many Americans living in poverty — is more about politics than policy, said Michael Saltsman, research director at the Employment Policies Institute, which focuses on economic, labor and employment growth.
Polls consistently show a majority of Americans favor raising the minimum wage when asked a generic question about it, leading Democrats to conclude the issue will help them win at the ballot box.
“There will be some commotion in the Senate about a higher minimum wage, but Democrats don’t want the minimum wage to go away as an issue. It’s part of their election-year strategy,” Mr. Saltsman said. “If you look at the states where [a push for a higher minimum wage] is happening, Florida, Michigan … it’s part of the same strategy, which is not about helping workers. It’s about boosting voter turnout.”
Mr. Saltsman, along with many leading business groups, also point to research showing a higher minimum wage will hamper, not help, job creation and will hurt young Americans seeking entry-level positions.
“The empirical research suggests if the goal is to help the working poor, a higher minimum wage isn’t going to do the trick,” he said.