In his State of the Union address last night, President Obama announced that he will sign an executive order raising the minimum wage for workers employed through new federal contracts to at least $10.10 per hour. The order will apply to contracts signed after its effective date, and it is expected to impact several hundred thousand workers in fast food, construction, and janitorial services.
Industry groups representing government contractors called the order unnecessary since the Service Contract Act, covering service contracts with the federal government of at least $2,500, and the Davis Bacon Act, covering construction workers on federally funded projects, already require federal contractors to provide wages and fringe benefits to workers at a level prevailing in the locality.
Obama also urged Congress to pass the Fair Minimum Wage Act, which would increase the federal minimum wage from $7.25 per hour to $10.10 in three steps over several years and index it to inflation thereafter. The bill would also raise the minimum wage for tipped employees. The Senate is expected to vote on the bill in early March, but it faces opposition in the House.