There’s a considerable amount of huffing and puffing about the President Obama’s requiring federal contractors to pay a higher minimum wage to their employees:
President Obama will announce in the State of the Union address Tuesday that he will use his executive power to increase the minimum wage to $10.10 per hour for workers on new government contracts, fulfilling a top demand by liberal lawmakers and groups, according to a White House document.
Obama will also renew his call for Congress to pass legislation to raise the federal minimum wage for all workers from $7.25 per hour to $10.10 per hour by 2015. But the president is taking the executive action with no clear timeline for Congress acting on the broader legislation. Previously, the White House said it wanted to concentrate on the legislative route for boosting the minimum wage.
What’s not being said is that the announcement may be largely or even completely symbolic. It won’t take effect until after 2015 when new contracts kick in. Just as importantly, no one knows how many workers will be affected. There’s apparently a study out there that says that 75% of the employees of certain federal contractors, “contractors who manufacture military uniforms, provide food and janitorial services, and truck goods”, are paid under $10 an hour. Sadly, the report seems to be unreachable. Based on the reported accounts there’s no reckoning of how much below $10 an hour is being paid (if there were, I would think the news accounts would report it) and the news reports fail to mention actual numbers of people. In any event I would think the additional labor cost will simply be passed on to the federal government’s general fund. There’s probably a limit to how much those contractors can utilize capital investment to offset the increased cost of labor.
There also appears to be no mention of how the order will be enforced.