Accessibility links

Breaking News

Obama Raises Minimum Wage for Federal Workers

President Barack Obama works at his desk in the Oval Office of the White House in Washington, Jan. 27, 2014, ahead of Tuesday night's State of the Union speech.
President Barack Obama's plan to raise the minimum wage for federal government contract workers sets the stage for a renewed Washington political fight over whether to increase paychecks for low-income workers across the country.

The White House announced Tuesday that Obama would sign an executive order increasing the pay floor for new government contractors from $7.25 an hour to $10.10.

In 2012, the government said 16,000 federal workers were paid at or below the minimum wage, so his order would affect relatively few workers in the coming months as the government signs new contracts with private employers.

But the broader debate between Obama, a Democrat in his sixth year as president, and his Republican opponents in Congress, is whether to increase the national minimum wage. That would affect about 3.6 million workers the U.S. says were paid at or below the minimum wage when it calculated the figure two years ago.

The White House said the $10.10 an hour wage for new federal contract workers would boost the pay of low-income construction workers and military base personnel washing dishes and doing laundry. With an annual wage of about $21,000, it would push a family of three above the country's poverty line.

The White House announced the plan ahead of Obama's Tuesday night State of the Union address to Congress. It said raising the minimum wage nationally would reduce poverty "without jeopardizing employment" and improve the morale of low-income workers. It is part of Obama's call to reduce income inequality in the U.S., to narrow the gap between the wealthiest and poorest Americans.

Some U.S. corporate executives agree with Obama that the minimum wage should be increased. But Congress rebuffed him after he called for a pay boost in his 2013 State of the Union speech.

Opponents say that increasing the minimum wage hurts businesses and curbs job creation.

The leader of the Republican-controlled House of Representatives, Speaker John Boehner, said employers often lay off low-wage workers when faced with paying higher minimum wages.
"We know from increases in the minimum wage in the past that hundreds of thousands of low-income Americans have lost their jobs," Boehner said. "And so the very people the president purports to help are the ones who are going to get hurt by this."

In the U.S., 20 of the 50 states already have mandated minimum wages that are higher than the current $7.25 national requirement, but all are below the $10.10 figure Obama is proposing. A recent CNN survey showed 73 percent of those polled favor increasing the minimum wage across the country.