Executive Order Hikes Minimum Wage for Federal Contractors
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New Executive Order to Increase Minimum Wage for Federal Contractors

By Ashley Kaplan​

Following last month’s State of the Union address, President Obama signed an executive order to raise the minimum wage for federal contract workers to $10.10 starting in 2015. The executive order also includes provisions to raise minimum wages for tipped employees and prohibit contractors from paying disabled workers subminimum wages.

This executive order applies to new or renewed contracts beginning on January 1, 2015 and will not retroactively change current contracts. Additionally, the minimum wage will be increased annually to reflect inflation changes in the Consumer Price Index.

While this order only changes the minimum wage for federal contract workers, President Obama is urging Congress to raise the minimum wage for all employees. The federal minimum wage currently stands at $7.25. It was last raised in 2009.

The President and others who support the wage increase say that the 2009 rate is outdated by today’s cost of living standards and higher wages are needed to reduce poverty. Proponents also believe that raising minimum wage helps to increase employee morale, thereby boosting productivity and engagement levels, decreasing turnover rates, and reducing supervisory costs. Critics, however, argue that higher wages will lead to job cuts and reduced hours for workers, especially with the added costs the Affordable Care Act will also bring in 2015.

About Ashley Kaplan

Ashley Kaplan is an employment law attorney and HR consultant who oversees product development of compliance solutions for employers. While she devotes much of her time to tracking federal and state legal developments, she also enjoys traveling, playing soccer, and spending time outdoors with her family enjoying the Florida sunshine.

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