Blocked by partisan gridlock in Congress, President Barack Obama has declared he would issue an executive order to raise the minimum wage to $10.10 an hour for federal contract employees “because if you cook our troops’ meals and wash their dishes, you shouldn’t have to live in poverty.”
The president’s higher minimum wage declaration for a group of employees he has the power to raise wages for was applauded by supporters of raising long-stagnant pay, but greeted warily by those that might have to pay more or dismissed outright because other federal contract regulations in many cases require companies to pay more than what the White House promised.
“While Congress decides whether it’s going to raise the minimum wage or not, people outside Washington are not waiting for Congress,” Obama said in his State of the Union speech Tuesday. “And I’m not, either.”
While the president has the power to raise federal contract employee wages, he would need congressional approval to raise the federal minimum wage for most others, sources said.
The federal minimum wage rate is $7.25 an hour, and $7.95 an hour in Ohio.
Wright-Patterson Air Force Base, the largest single site employer in the state, has the most federal contract employees in the region, but the Air Force could not provide numbers on how many earn less than the targeted hourly wage. The rule would take effect in new contracts to give contractors time to price bids compensating for the higher costs, according to the Air Force.
The base had 3,447 contract employees and a $344 million payroll in fiscal year 2012, the most recent figures available, base spokesman Daryl Mayer said.
Ross Eisenbrey, vice president of the labor-oriented Economic Policy Institute in Washington, D.C., estimated at least 200,000 federal contract employees nationwide earn less than $10.10 an hour today.
“I think it’s an important announcement to the public that the president, at least, the administration sees wage stagnation as a serious economic problem for the country,” Eisenbrey said, who urged the Obama administration to enforce payment for employees’ overtime.
Obama has urged passage of the Fair Minimum Wage Act of 2013 to raise the federal minimum wage to $10.10 an hour and index it to inflation in later years. U.S. Rep. George Miller, D-Calif., and U.S. Sen. Tom Harkin, D-Iowa, introduced the bill that would raise the minimum wage in three incremental steps.
Stan Soloway, president and chief executive officer of the Professional Services Council in Arlington, Va., didn’t think the president’s executive order would have a substantial impact on defense contractors.
“The fact is that government contractors performing these services are required to pay the salaries dictated by the Department of Labor” under the Service Contract Act, which often exceed Obama’s proposed change, Soloway said in a telephone interview.
He was concerned, however, the executive order “feeds a mythology” contractors treat employees unfairly. “The requirements of the federal prevailing wage laws and the government’s central role in determining the definition of a fair and reasonable wage are clear and long-standing,” he said in a statement. “Moreover, there is a natural concern that amid a national debate over the minimum wage, government contractors are being uniquely singled out.”
At Wright-Patterson, 625 government employees, who typically worked in lower paid jobs in retail and client services, such as the base exchange, golf course, child care center, lodging and bowling alley, were paid from non-appropriated funds, or revenue drawn out of commercial sales and user activity fees.
One place the new wage rate might have an impact in the future is TAC Enterprises in Springfield. The nonprofit paid $9.15 an hour to about 70 mostly developmentally disabled employees to repair or manufacture cargo nets for the Air Force through the end of last year, said Mary Brandstetter, president and CEO. The nonprofit anticipated signing a new, multi-year contract with the Air Force within days before the president’s executive order will be issued, she said.
Her organization was studying the impact of the higher wage rate might have on future contracts, however. Last March, defense budget cuts led the company to layoff 17 employees, and impose furlough days and reduced wages to deal with less revenue, she said.
“We would hope to pass that (higher cost) on in the finished product to the government.” she said. “It’s too early to say if we have concerns or not. We have not even opened this door with them.”
Goodwill Easter Seals Miami Valley has more than 60 workers at Wright-Patterson, who clean offices or stock shelves at the commissary, said Kim Bramlage, a Goodwill spokeswoman. The workers earn a starting wage of $14.75 an hour, well above the president’s targeted higher minimum, because those wages are set by the Service Contract Act, she said.
“For us and our contracts, it’s a moot point,” she said. Under the federal contract, Goodwill must employ at least 75 percent of workers with a disability, and about 85 percent met that criteria, she said.
The Dayton VA Medical Center hires mostly skilled trades workers, from elevator repair technicians to construction workers, subject to the Service Contract Act and Davis Bacon and Related Acts wage rates, according to Tenisha Smith, a VA spokeswoman. They earn more than the federal contract minimum the president has pledged, she said.