HR Management & Compliance

President Obama signs executive order raising federal contractor minimum wage to $10.10

President Barack Obama has signed an executive order raising the minimum wage federal contractors must pay to $10.10 an hour.

The White House released a fact sheet ahead of the January 28 State of the Union speech saying Obama would use his executive authority to raise the minimum wage for those working on new federal contracts. The current federal minimum wage, in force since 2009, is $7.25 an hour.

The increase will cover employees such as janitors and construction workers as well as dishwashers and laundry workers on military bases. It will apply to contracts made after the effective date of the order, January 1, 2015.

The White House fact sheet argues that the executive order “will provide good value for the federal government and hence good value for the taxpayer” by lowering turnover, increasing morale, and leading to higher productivity.

In addition to the executive order covering federal contractors, Obama plans to urge Congress to pass a law raising the minimum wage for all workers, echoing the plea for a new minimum wage he voiced in last year’s State of the Union.

A bill sponsored by Senator Tom Harkin (D-Iowa) and Representative George Miller (D-California) would raise the federal minimum wage to $10.10 an hour. The increase would be phased in over two years and would be indexed to the rate of inflation. That bill has run into opposition from Republicans, who say a higher minimum wage would increase unemployment.

Even without action on a federal minimum wage increase, states and municipalities have debated and in some cases passed minimum wage rates topping the federal minimum. Currently, 21 states and Washington, D.C., have minimum wages higher than the federal minimum in at least some circumstances. A chart from the U.S. Department of Labor shows those states as Alaska, Arizona, California, Colorado, Connecticut, Florida, Illinois, Maine, Massachusetts, Michigan, Missouri, Montana, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon, Rhode Island, Vermont, and Washington.

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