When the federal government was partly shut down last October, it was tough on federal employees who couldn't do their jobs and missed pay. But it was even tougher on the cleaning crews, restaurant staff and others who work for companies that contract with the federal government. Unlike the federal employees, who were reimbursed after the federal budget stand-off was finally resolved, workers in businesses contracting with the federal government never made up their losses. Not long ago, I listened to a young mother with some college education who worked at a pizzeria in the Reagan building in Washington. During the shutdown, she was paid only the minimum wage for a tipped worker: $2.13 an hour.
She said, "Can you imagine being told you are only worth $2.13 an hour?"
She reminded me that workers like her get low pay, few benefits and no protections from Congressional malpractice.
President Obama announced in his State of the Union message that he would exercise his authority to require new federal contracts with private sector firms to pay a minimum wage of $10.10. That is an important step likely to raise the pay of about 200,000 workers. The President's determination to "lead by example" will improve many lives, but he had to call on Congress to raise the minimum wage for all other workers. If the proposal to raise the minimum wage to $10.10 by 2016 is enacted, nearly 28 million workers will benefit, according to the Economic Policy Institute.
The President, in backing the Harkin-Miller minimum wage bill, supports a raise for those with income from tips, although we don't yet know whether his executive order will apply to them. Tipped workers have not seen their $2.13 per hour minimum wage rise in 23 years. The last time the basic minimum wage was raised, in 2009, tipped workers were left out. But the President included them last night.
This State of the Union was all about inclusion. The President acknowledged that the economic gains after the Great Recession have gone largely to those at the very top, excluding most of us. The American belief in opportunity for all has suffered some blows, he said. Our economy is excluding more and more people. At 62.8 percent labor force participation in December, the work force is at its lowest point since 1978. Rebounding from this low requires bringing back the long-term unemployed, who were abandoned by Congress when Senate Republicans refused to allow a vote on extending federal unemployment benefits. Since the end of December, 1.6 million long-term jobless have had to go without assistance, with 72,000 more losing unemployment insurance each week. The President called upon Congress to renew Emergency Unemployment Compensation for the long-term jobless, and will encourage employers to hire them.
Greater inclusion -- enabling more of us to share in economic growth -- does require more jobs. The President had a variety of proposals for job creation, including immigration reform, which he said would generate $1 trillion in economic growth over the next two decades. He continued to press for infrastructure jobs, and would fund them by temporary revenue increases from corporate tax reform. As in years past, he called for ending tax loopholes that encourage companies to ship jobs and profits overseas. He is right to want to close those loopholes, but the net result of corporate tax reform should be long-term revenue gains, not temporary increases.
President Obama impressed Vice President Biden into service for a review of federal job training programs, seeking to connect more workers to jobs through effective training. He called on the private sector to expand apprenticeship programs, another way to include more workers, especially young adults.
Young workers have had an especially hard time since the Great Recession. Unemployment for 16 to 24-year-olds, 18.5 percent in July 2009, was 16.3 percent in July 2013 -- still very disproportionately high. Poverty for a similar age group (18 to 24-year-olds) was also disproportionate: 20.4 percent were poor in 2012 (compared with the total poverty rate of 15 percent). The President proposed to increase the Earned Income Tax Credit for workers without children (or noncustodial parents), which would offer needed help to these young workers. He noted that Senator Rubio (R-FL) had recently proposed to increase the EITC for childless workers, and urged bipartisan support for this important expansion. Senator Rubio's plan, while not very specific, seemed to require a considerable reduction in the value of the EITC for families with children; the President instead would help the childless workers without hurting families.
Delivering his speech 50 years after Lyndon Johnson used his State of the Union address to call for an "unconditional war on poverty," President Obama's emphasis on rising inequality and the need to increase opportunity was welcome, if far less unconditional than Johnson's. Johnson had to overcome the conservatism of southern Democrats, making his record of achievement all the more stunning: food stamps, Medicare, Medicaid, civil rights legislation, Head Start, community action and much more. Today's Congress is dauntingly intransigent. The enactment of the Affordable Care Act will stand as a historic achievement for the Obama Administration, but the full commitment to expand opportunity is a longshot in the current Congress. Such a commitment is badly needed. By a combination of executive actions and legislative proposals that might move with enough public support, President Obama is engaging in a politics of inclusion. He deserves and will need active support in "summoning what is best in us," to include the poor, jobless or underpaid, young or old, immigrant or native-born, in shared economic recovery.