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Obama Uses Executive Order To Boost Minimum Wage For Federal Contracts

Written by Tim Morral
Published: 1/30/2014

White House sets new minimum wage of $10.10 for workers under new federal contracts, launches debate about the use of executive orders to circumvent Congress.

The federal minimum wage is a hotly debated topic among politicians and small business owners alike. Currently set at $7.25 per hour, advocates of a minimum wage hike argue that it currently falls far short of a living wage and creates large numbers of working poor, i.e. individuals who live at or near the poverty level despite working one or more jobs.

Obama Minimum Wage Executive Order

This week, the AP reported that the Obama administration plans to sign an executive order to raise the minimum wage for federal contracts to $10.10 per hour. Seen by some as simply a way to circumvent Congress, the move undergirds Obama's call for Congress to enact a minimum wage hike for all workers to $10.10 per hour, an increase that would be indexed to inflation for future increases. The administration has also supported legislation that would boost the minimum wage for workers who receive tips. If passed, the legislation would raise mandated minimum wages for tip-earning workers for the first time in more than two decades.

Although the president does not require Congressional approval to increase the minimum wage for federal contract workers, many legislators are upset by the decision.

"We have a minimum wage. Congress has set it. For the president to simply declare I'm going to change this law that has passed is unconstitutional," Rep. Steve King, R-Iowa, a six-term conservative told CNN.

According to the AP report, the minimum wage increase for federal workers will only affect new contracts and will not apply to workers under existing federal contracts. Likewise, contract renewals will not be impacted, unless other terms of the contract also change.

For employers, the minimum wage issue is a tricky topic. Small business owners are invested in their employees' financial well-being and want to make sure their workers receive fair compensation. However, a significant increase in the minimum wage could potentially cripple certain small businesses, especially for employers that operate on tight margins and employ large numbers of unskilled workers.

But for now, most small business owners won't be affected by the current increase. According to the White House, the workers who will primarily benefit from the administration's executive order will be federally contracted janitors, construction workers and unskilled civilian workers on military bases.

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