Obama To Raise Minimum Wage For Federal Contract Workers By Executive Order

01/28/2014 06:07 am ET | Updated Feb 13, 2014

WASHINGTON -- President Barack Obama will announce during Tuesday night’s State of the Union address that he's raising the minimum wage for workers under federal contracts to $10.10 per hour, an administration official told The Huffington Post.

The new policy, to be instituted via executive order, may affect hundreds of thousands of workers whose jobs are supported by federal dollars. The move is designed in part to ratchet up pressure on Congress to pass legislation raising the minimum wage for all workers. The current federal minimum wage stands at $7.25 per hour, and hasn't been raised since 2009, after the last of a series of increases signed into law by then-President George W. Bush.

The new executive order is part of a broader pledge from the White House to pursue policies that don’t rely on congressional approval. What other policies are in the works, the administration has refused to say.

According to an Obama administration fact sheet, the executive order will cover “workers who are performing services or constructing buildings and are getting paid less than $10.10 an hour.” Those likely to see bumps in future paychecks include dishwashers, food servers and construction workers. Many work in government buildings, but for private employers.

The executive order to be announced by the president during Tuesday night's speech will take effect only for “new contracts after the effective date of the order.” The administration will honor existing contracts, but the speech gives notice to contractors to adjust future bids -- likely by raising them -- to accommodate the higher wages.

The move marks a significant victory for labor unions and a handful of progressive Democrats who pressed the president to issue the order, including Reps. Keith Ellison (D-Minn.) and Raul Grijalva (D-Ariz.), co-chairs of the Congressional Progressive Caucus, and Sen. Bernie Sanders (I-Vt.).

Ellison personally handed the president a letter on the matter last month. Just last week, at an event hosted by the left-leaning Economic Policy Institute, he publicly questioned Jason Furman, the chairman of Obama's Council of Economic Advisers, on whether Obama planned to issue the order. Ellison later criticized Furman for what he felt was an evasive answer.

"We feel the federal government has a responsibility to set good labor conditions. We're not talking about anything outrageous," Ellison told HuffPost last week. "If you look at the economics here, corporate profitability is very high now. They can afford it."

In recent months, the prospect of an executive order had become a rallying cry for low-wage workers employed in government buildings in Washington. The Change to Win labor federation, which includes the Service Employees International Union, has been organizing food-court workers at the Reagan Building, Union Station and even the Pentagon, carrying out a series of one-day strikes to draw attention to the low wages funded by federal dollars. The workers who took part made a point of noting that the president had the ability to raise their wages with the stroke of the pen.

Mary Kay Henry, the president of SEIU, told HuffPost the order is one way for the president to directly boost the wage floor, with or without the help of Congress.

"We call it a responsible contractor policy," Henry said. "It sends a huge message to the private sector."

Last week, a group of low-wage service workers took part in a walkout at the Pentagon. One of the workers, Jerome Hardy, told HuffPost that after eight years working at the seat of the Defense Department he was still earning just $9 per hour. "Not a penny raise -- a nickel, quarter, nothing," the 52-year-old said.

The left-leaning think tank Demos produced a report last year showing that many of the food and janitorial jobs under federal contracts don't provide a living wage or basic benefits like health care or sick leave. Much of the taxpayer money instead ends up subsidizing the high salaries of executives at companies with concessions contracts, according to the report, titled "Underwriting Bad Jobs."

During his State of the Union address, Obama also will call on Congress to enact legislation championed by Sen. Tom Harkin (D-Iowa) and Rep. George Miller (D-Calif.) to raise the overall federal minimum wage to $10.10 per hour and peg it to inflation. That bill, which has broad Democratic support, would also increase the minimum wage for tipped workers, which hasn't budged in 20 years.

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