This morning, President Obama is announcing that by executive order, he’s raising the minimum wage to $10.10 for those working on new federal contracts.
The two-page “fact sheet” for the move fails to mention how many workers would be getting better wages. Note that the executive order only sets the minimum wage level for new contracts, as the White House cannot change the terms of existing contracts.
Representatives Keith Ellison (D., Minn.) and Raul Grijalva (D., Ariz.), co-chairmen of the Congressional Progressive Caucus, pushed for the change, and contended the raise would affect 2 million workers, which seems astonishingly high, considering that the high estimates of number of federal contractors is about 4.4 million.
These comments from the Government Executive site indicate a federal contractor making minimum wage is rarer than hen’s teeth:
Can only speak from experience of contracting out logistics functions; never seen one contract where a single employee was paid “just the minimum wage” . . .
I am Contracting Officer and haven’t seen any contract that pays minimum wages. Most of the contractors make more than their counterparts in the private sector. Then you have administrative cost to manage the contract, so it already cost more to contract it out . . .
If they raise the lower wage for non-skilled labor people, will that mean that OPM will have to adjust all the pay scales all the way up the line? I know that the WG [worker grade] scales are based on the local market but GS [general schedule] is only offset by local. Will4567 is right about contractors paying higher than minimum wage. Here at this location, the contractors pay on average $.50 to $1.25 higher than the local economy.
But that little talking point really hinges on how broadly you define “affect.”
The Center for Union Facts analyzed collective-bargaining agreements obtained from the Department of Labor’s Office of Labor-Management Standards. The data indicate that a number of unions in the service, retail and hospitality industries peg their base-line wages to the minimum wage. . . . The two most popular formulas were setting baseline union wages as a percentage above the state or federal minimum wage or mandating a ﬂat wage premium above the minimum wage.
And now you see why raising the minimum wage is such an intense priority for Democrats. A higher minimum wage means higher wages for union workers, which means higher union dues, which gives unions more money to spend during campaign season.