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Obama’s Minimum-Wage Increase Is On Solid Legal Ground

Jenn Rolnick Borchetta

Through the Procurement Act, Congress centralized management of government contracts and gave the president license to use his judgment in setting federal contracting practices. 

In a Washington Post op-ed last week, Eugene Scalia and Rachel Mondl, two private sector D.C. lawyers, called on judges to strike down the executive order that will raise pay for federal contract workers to a minimum of $10.10 an hour. While the title and introductory paragraph misleading assert that the order is on “shaky” legal ground, the D.C. lawyers instead actually argue that the order is proper under current law and courts should change the law so that it isn’t. But let’s take their accusation head on: as I have argued here before, a clear look at the law reveals that Obama’s minimum wage order stands on solid legal ground.

Sixty-five years ago, Congress recognized that the absence of a streamlined system for managing government contracts for services and products was inefficient and uneconomical. To solve this problem, Congress passed the Federal Property and Administrative Services Act of 1949, a.k.a. the “Procurement Act.” Through the Procurement Act, Congress centralized management of government contracts and gave the president license to use his judgment in setting federal contracting practices. 

In 1979, the statute’s text and legislative history compelled the U.S. Court of Appeals for the D.C. Circuit, sitting en banc, to conclude that the Procurement Act “grants the President particularly direct and broad-ranging authority over those larger administrative and management issues that involved Government as a whole.” The court held that an executive order is a proper exercise of the president’s Procurement Act authority so long as the order has a “sufficiently close nexus” to the goals of economy and efficiency in government contracting. 

After that 1979 decision, Congress never acted to narrow the president’s authority under the Procurement Act, despite that over a thousand executive orders have since issued. 

And courts have repeatedly affirmed and reiterated the D.C. Circuit’s 1979 decision. In 2003, the same court held that the sufficiently close nexus test is a “lenient” standard and that the president’s judgment of what will serve the goals of economy and efficiency is entitled to substantial deference. In 2009, a federal district court in Maryland opined that “courts have repeatedly noted that the President has broad discretion under the Procurement Act” and that the close nexus test requires “little more than that [the] President’s explanation . . . be reasonable and rational.” 

To suggest, as Scalia and Mondl do, that the D.C. Circuit felt shackled in 2003 by its 1979 decision is nonsense. The court faced a different executive order and easily could have distinguished the facts from the earlier case. Instead, it emphasized the leniency of the standard and deferred to the president’s judgment of the order’s economic effects despite that “one [could] with a straight face advance an argument claiming opposite effects or no effects at all.” Notably, the full D.C. Circuit declined to review this decision. 

While Scalia and Mondl scoff at deference to the president’s business judgment, the law demands such deference. Obama issued the minimum wage order to lower turnover and improve productivity on federal contracts and to increase the quality and quantity of contract proposals submitted. Because the minimum wage order is rationally related to the economy and efficiency of federal procurement contracts, Obama is well within his legal authority. 

Scalia and Mondl pretty much concede this. They conclude their piece by suggesting that courts should “begin placing limits” on the procurement power—as in: the law does not undermine the minimum wage order and the courts should change the law so it does. That would be a change contrary to years of precedent and congressional intent.

The D.C. lawyers—who defend corporations against claims of labor violations for a living—complain that Obama is not motivated by economics and that he is instead motivated by a desire to throw American workers a lifeboat. Yet his justification for the order is sufficient under long standing legal precedent and his alleged motivation is irrelevant. 

Scalia and Mondl apparently take issue with raising the minimum wage as a policy matter, but their argument that the executive order is on shaky legal ground has no legal merit.