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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the 2009 rate is outdated by today’s cost of living standards and higher wages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.
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.