Executive Order Raises Minimum Wage of Some Federal Contract Employees

Charles W. Miller & Associates

This month, President Obama issued an executive order that would increase the minimum wage for federal contract employees from the current $7.25 per hour to $10.10 per hour beginning next year. While the number of employees affected is small, the gesture could have wider implications across the United States, including in Kentucky and Indiana. President Obama first announced the executive order during his State of the Union address in January. When he signed the order, he did so surrounded by employees who could possibly benefit. Even so, both the President and supporters of the executive order acknowledged that the number of employees it would help was just a drop in the bucket compared to the number of employees who were not earning sufficient income despite working full time. The executive order would apply only to a small percentage of the two million federal contractors across the country.

However, both President Obama and supporters of the executive order hope that it creates momentum both in the states and in Congress to raise the minimum wage. President Obama pressed Congress to pass legislation that would raise the minimum wage for all workers, calling it “the right thing to do.” That said, Congress has shown little willingness to pass minimum wage legislation, though the President and allies are working on strategies to convince both houses.

The minimum wage boost applies only to new contracts, not to existing federal contracts. A recent survey found that more than three-quarters of federal contract employees work in food service, retail, or janitorial service. Of this group, four in every 10 needed to rely on assistance programs like food stamps and Medicaid.

Meanwhile, in Kentucky, the House Labor and Industry Committee recently approved House Bill 1, which would raise the state minimum wage from its current $7.25 per hour to $10.10 per hour over three years and deal with current existing pay inequities. The committee also passed House Bill 191, which would raise the current hourly wage for tipped employees from $2.13 to $3 per hour immediately, and eventually bring it to 70% of the minimum wage. Though some opponents claimed that these changes would “bankrupt” the fast food industry, the House Speaker, Greg Stumbo, charged that these businesses needed to be reasonably regulated.

In Indiana, less progress has been made on a minimum wage increase, but Senate Bill 327 has been introduced and awaits a hearing. The action in both states demonstrates a widespread understanding that the current minimum wage does not provide a living wage for employees. More must be done to ensure not only that hard-working employees get paid decently for their efforts, but to help boost the states’ and national economies. It may be that the minimum wage rises to $10 or more across the country, with or without Congress’s support.

Charles W. Miller & Associates is an Indiana and Kentucky plaintiffs law firm serving residents of Kentucky and Indiana. Located in Louisville, Kentucky, the firm provides representation in the areas of personal injury and employment law. If you need a Kentucky employment law attorney, contact us today for a free consultation.

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