President Barack Obama’s decision to unilaterally raise the minimum wage for federal contractors will not help as many workers as the president’s supporters claim.
Obama’s executive order to mandate $10.10 per hour wages for all federal contract employees was influenced by a liberal study that estimated more than 2 million contractors earned less than the poverty line. However, a Washington Examiner analysis noted the discrepancy between these two figures.
Though the 2 million figure has been widely cited, it’s worth clarifying several points. To start, the 2 million estimate didn’t only include people who were employed through federal contracts, but also workers whose wages Demos estimated were funded through other federal spending, such as Small Business Administration loans, Medicare, and Medicaid. According to the Demos study, the number of workers who are employed directly through federal contracts was 560,000. A spokesman for Demos told the Washington Examiner that this is the category of people the group believes to be covered by the executive order.
But the number covered by the executive order would still be less than this 560,000.
One reason is that Obama’s executive order would raise the minimum wage to $10.10 per hour, which is lower than the $12 threshold used by Demos.
The administration has refused to clarify how many people will benefit from the 40 percent wage increase. Weekly Standard reporter John McCormack, for example, found that the average janitor earned more than $10.10 per hour.
Under Obama’s executive order, the minimum annual salary for an employee working 40 hours a week for 52 weeks a year on a federal project would be about $21,000. The median salary for construction workers was $29,990 in May of 2012, according to the Bureau of Labor Statistics. The median salary for janitors was $22,320 at the time.
The Census Bureau does not have specific data on federal contractors, so trying to ascertain even broad estimates is difficult. The majority of research provided by liberal activists, such as Demos, has relied on identifying industries that receive contract dollars and matching them with average wages in those industries (e.g., a fast food worker on an army base is assumed to earn as much as a civilian fast food worker).
Michael Saltsman, research director for the Employment Policies Institute, called such assumptions “debatable,” adding that there is little proof that Obama’s executive order amounts to anything more than a symbolic gesture.
“The bottom line is, I don’t think anyone, including the White House, really knows how many people this will affect,” he said.