January 29, 2014

Most Americans Don’t Know How Little Impact Obama’s Minimum Wage EO Will Have

In his Tuesday night State of the Union speech, President Barack Obama made the following pledge: “In the coming weeks, I will issue an Executive Order requiring federal contractors to pay their federally-funded employees a fair wage of at least $10.10 an hour – because if you cook our troops’ meals or wash their dishes, you shouldn’t have to live in poverty.”

One would have every reason to believe from Obama’s statement that the change will take effect quickly once the EO is issued — but it won’t. Additionally, one would have every reason to believe that when it does take effect, it will increase the pay of anyone currently employed on federal contract work at a pay rate of under $10.10 per hour — but it won’t do that either. Somehow, those “little” problems escaped “fact checkers” Josh Gerstein and Darren Samuelsohn at the Politico, who, while they did catch other problems with the President’s statement, swallowed a clearly false claim about its long-term impact:

Obama’s move — part of his challenge to Congress to boost the minimum wage for most workers to $10.10 — clearly fits with his drive to act where he can and press lawmakers to do more. But his ability to act unilaterally on this point is very limited as most employees of federal contractors make well over $10 an hour.


White House officials say a few hundred thousand employees could get a wage boost from the president’s action. But it would apply only to future contracts, so would likely take several years to have even that impact.

Across the United States, according to the Labor Department, 3.6 million workers currently make minimum wage or below. And millions who make a little more would get a boost if the wage went up to $10.10 — though some might lose their jobs or hours if employers respond to the higher wage costs by trying to use less labor.

Sorry, guys, if most employees of federal contractors are already making over $10.10 per hour, there’s no way a “few hundred thousand employees” (i.e., a minimum of 300,000) will “get a wage boost” from such an EO. I guess that’s why the word the White House used is “could” instead of “will.”

House Speaker John Boehner, in a story at MSNBC.com (of all places), identified the true immediate impact of Obama’s grandiose-sounding pledge:

House Speaker John Boehner denounced President Obama’s executive order to raise the minimum wage for new federal contract workers Tuesday morning, saying the move “affects absolutely no one.”

“This morning’s announcement, you should all know, affects no current contracts, only future contracts,” the top Republican said at his annual State of the Union day breakfast, according to NBC News.

To his credit, the Associated Press’s Sam Hananel found an additional “wrinkle” which will reduce the number of those affected far below six figures:


… Another wrinkle: The order won’t affect contract renewals unless other terms of the agreement change, such as the type of work or number of employees needed, according to White House officials.

That caveat is raising concerns for Rep. Keith Ellison, D-Minn., who has spent months urging Obama to increase wages for contractors. While Ellison called the announcement “a great first step,” he said he wants to make sure it’s implemented the right way.

“If you renew a contract, we expect everyone to make $10.10,” Ellison said.

Well, maybe the EO will do that, but it seems more likely that the EO, at least legally (if that matters any more), won’t be able to override routine contract renewals without actual legislation.

Unfortunately, as Matt Hadro at NewsBusters noted earlier this evening, these “wrinkles” mostly didn’t get into the network TV news shows — nor did Boeher’s assertion that it immediately affects “absolutely no one.” Readers probably won’t see them in most other news reports either.

Thus, many Americans will believe that the President will shortly accomplish something with significant immediate impact. But he won’t. But it will be a useful falsehood to employ during the 2014 congressional election campaigns.

Cross-posted at NewsBusters.org.



  1. Use someone else’s money to buy votes.
    Gee, this fundraising is easy.

    Comment by Jim — January 30, 2014 @ 9:46 am

  2. I recently wrote an article about how an increase in the minimum wage rate increases unemployment. You can read it here: http://wp.me/p3N9zD-4e

    Comment by Robert Boxer — January 30, 2014 @ 5:01 pm

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