Everything You Need To Know About What President Obama’s Doing To The Minimum Wage

January 28, 2014 | | ThinkProgress |

The minimum wage is going to rise for over 500,000 American workers whether Congress likes it or not. In Tuesday’s State of the Union address, President Obama will announce a unilateral executive action to raise the minimum hourly pay that companies that receive federal contracts must offer, a victory for workers who have been walking off the job at federal facilities in Washington D.C. since last spring. The new $10.10 minimum wage will not apply to existing contracts, but all new contracts must comply with it. [...]

Who would the new $10.10 minimum wage apply to? The workers aided by this action are separate from the overall federal workforce. Civil service employees and others directly employed by the government are not affected. But the federal buildings where those civil servants work need to be cleaned by janitors, maintained by technicians, and have their food courts serviced by line cooks and waitstaff and fast food cashiers. There are roughly 560,000people employed by those government contracts, according to Demos. Another 1.4 million low-wage workers whose jobs are supported indirectly by federal spending won’t be affected by this change, but Demos head Heather McGhee nonetheless said in a statement that “the president’s action adds momentum to the fight for a federal minimum wage increase that would benefit all Americans.”

Why do service workers at federal buildings need a higher minimum wage? The restaurant and building services companies that win the contracts to service federal buildings make a great deal of money for providing those services, but they tend to pay the workers who actually haul the trash and wrap the burritos a low wage. The average hourly wage for food prep and food service workers on federal contracts is $9.49 according to Demos, suggesting that many of the 560,000 total contract service employees in question currently make substantially less than that. Striking workers ThinkProgress spoke to like Courtney Shackleford and Justin New reported making $8.50 per hour at retail jobs in Washington D.C.’s federally-owned train station. Three out of four contract workers surveyed by the National Employment Law Project make less than $10 per hour. [...]

What more could be done for the low-wage workers who fulfill federal contracts?The new minimum wage for federal contracts won’t apply to current contracts, which DemosMcGhee called “unfortunate.” Assuming that the companies in question don’t voluntarily raise wages in anticipation of their contract renegotiations with the government, there are still a variety of ways lawmakers could make life better for these workers. For one thing, companies that violate U.S. labor law could be barred from federal contracts. The lack of such a prohibition meant that taxpayers sent $81 billion in 2012 to companies that had a combined 1,800 labor law violations over the previous six years. These companies not only pay low wages, but also steal from their employees, according to a pair of wage theft complaints filed in D.C. over the past several months. Cities like Houston and Chicago have passed laws that bar any company convicted of wage theft from winning city contracts — a policy that could be replicated at the federal level.

Meanwhile, the CEOs of these companies make $24 billion in taxpayer money each year from the same contracts that allow them to pay poverty wages to their workers. Another more complicated step to raise federal contract worker wages would involve capping the amount of money that corporate executives can be paid. According to Demos, capping the taxpayer contribution to corporate executive pay at the same level of the Vice President’s salary would free up enough money to give every federal contract employee a nearly $14,000 annual raise.