Obama will force federal contractors to raise minimum wage

Anita Kumar

For years, liberal groups privately – and unsuccessfully – pressed President Barack Obama to use the power of the federal government’s purse to raise the minimum wage for employees whose companies had contracts with the federal government. Last year, after Obama again failed to act, they changed strategies, launching a public campaign complete with employee strikes.

It worked.

On Tuesday, Obama, frustrated that Congress has refused to raise the minimum wage for all Americans, announced that he’ll use his executive power to increase salaries for hundreds of thousands of workers with the stroke of a pen. It’s the latest example in the evolution of his use of power, from a critic of his predecessor as too prone to executive actions to an incumbent increasingly willing to do the same.

In his State of the Union address, Obama planned to say he’ll sign an executive order to raise the minimum wage from $7.25 to $10.10 per hour for employees involved in future government contracts as a way to lower turnover, boost morale and increase productivity.

“The announcement today is a huge victory for every worker who took to the streets last summer demanding to be paid a wage they deserve,” said Rep. Keith Ellison, D-Minn.

The White House offered no estimate of how many workers the change would affect, though supporters guess that the number would reach into the hundreds of thousands, including those who serve food and wash dishes, clean laundry and buildings, and manufacture military uniforms. Federal spending on contracts reached more than $500 billion in 2012.

Two million Americans work on federal contracts, according to a report by Demos, a public policy organization, though only some of them receive the minimum wage. A National Employment Law Project study found that about 75 percent of such workers earn less than $10 an hour.

Obama’s action will be more limited that advocates had hoped, affecting only future or renegotiated contracts.

Still, they cheered the decision, calling it a “first step” to Congress increasing the minimum wage for all workers, a move that most Americans support, according to recent polls.

Obama renewed his call for lawmakers to pass a proposal to raise the minimum wage for all workers to $10.10 per hour by 2015. A legislative increase would affect 27 million workers, according to an analysis of census data by the nonpartisan Economic Policy Institute.

“The president clearly shares the frustration of working families waiting for Congress to pass an urgently needed and overdue increase in the federal minimum wage,” said Christine Owens, the executive director of the National Employment Law Project. “I’m hopeful the president’s leadership will inspire congressional leaders to follow suit.”

Obama has known for years that he had the power to raise the minimum wage, using as a model President Lyndon Johnson’s executive order banning gender and racial discrimination against employees whose companies had federal contracts. Subsequent presidents have used similar actions to regulate contractors.

But Obama resisted using the power, choosing instead to push Congress to raise the minimum wage.

Obama came into office four years ago publicly skeptical of using executive powers. But he’s grown more comfortable trying to move his agenda forward, particularly after Republicans took control of the House of Representatives in 2010. He’s used executive powers on immigration and gun control, climate change and gay rights.

Last September, his administration announced that it would extend minimum wage and overtime protections to nearly 2 million home-care workers who look after the elderly and people with disabilities by forcing their employers to abide by the Fair Labor Standards Act, the nation’s main wage and hour law.

“In 2008, Barack Obama ran against the overreaching use of executive power by the Bush administration,” said Ilya Somin, a constitutional law expert at the George Mason University School of Law. “Since then, unfortunately, he has matched and sometimes even exceeded Bush-era excesses in this field.”

Some conservatives criticized the new move, calling it too liberal with tax dollars.

“If you are talking about spending taxpayers’ money, the criteria should be the best job for the cheapest possible,” said Michael Strain, a resident scholar at the American Enterprise Institute, a conservative research center.

Republican lawmakers were relatively quiet about Obama’s action, but they’ve bristled at the president’s latest proclamation that he’ll rely on his own power more.

“House Republicans will continue to look closely at whether the president is faithfully executing the laws, as he took an oath to do,” said Speaker John Boehner, R-Ohio. “Now, I think dealing with federal contracts and the minimum wage, he probably has the authority to do that. But we’re going to watch very closely because there’s a Constitution that we all take an oath to, including him, and following that Constitution is the basis for our republic. And we shouldn’t put that in jeopardy.”

Liberal groups pushed the White House for the executive order on the minimum wage throughout Obama’s first term. After he failed to act, they decided to prod him in public, according to some activists familiar with the lobbying who spoke anonymously in order not to criticize the president publicly for not acting sooner. Hundreds of federally contracted workers from the Smithsonian museums, Union Station train station and the Pentagon went on strike over the last seven months.

Luis Chiliquinga, 65, who earns $8.32 an hour at the National Air and Space Museum’s McDonald’s restaurant, lauded the president on Tuesday.

“After risking it all to go on strike for a fair wage,” he said, “I’m proud to have a president who will stand up for a living wage because the workers themselves decided to take a stand.”

In recent months, support for raising the minimum wage has increased, with some states and localities choosing to raise their own and a group of senators sending Obama a letter urging him to issue an executive order.

“There’s been a growing push. There’s a groundswell right now,” said David Madland, the director of the American Worker Project at the Center for American Progress, a liberal research center.

By Anita Kumar
McClatchy Washington Bureau