CONTRACTORS RAISE IN MINIMUM WAGE

As you might have heard in the State of the Union, President Obama is flexing his executive authority, raising the minimum wage for federal contractors to $10.10 an hour. Obama has asked Congress to enact the increase, but they have not yet voted on it. However, this type of action does not need congressional approval; the President can use an executive order to pass the motion without approval from Congress.

Many familiar with contracting are scratching their heads. Either because the minimum wage on most government contracts they’ve seen is currently at $10, or because they don’t know any federal contractors that make under $10.10.

The government contracting biz ranges over so many different industries, though, that, if you take a closer look, there are probably plenty of workers under a federal contract potentially not earning $10.10. Workers in the janitorial, food, and landscaping industries on military bases and elsewhere will benefit in particular. If the raise were to go through, around 2 million workers would benefit.

The white house stated: “Raising wages for those at the bottom will improve the quality and efficiency of services provided to the government.” If this pay raise were to happen all at once, some contractors would find themselves in a financial pickle, so the raise is only going to take effect for new or renewed contracts, giving contractors time to adjust.

J. David Cox, the American Federation of Government Employees, is in favor of Obama’s initiative, but also says that “if the president is to have any credibility in talking about living wages, he needs to get his own house in order first and do everything in in his power to establish $10.10 as the minimum wage for all federal hourly workers.”

This is an especially important criticism of the movement since Obama just recently signed an executive order for a pay increase for all federal, white-collar employees’ salaries. And, of course, Obama is pushing for an increase in minimum wage for all American workers regardless of whom they work for.

Many are worried that an increase in wages for all employees will discourage businesses from hiring new employees, thus affecting the job market. It’s a job first, wages next mentality. The wage increase for federal contract employees would be similar to the white-collar, federal employee in that the increase is technically only 1% across the board.

One of the main arguments by democrats is that the government should not be involved in providing jobs that leave the people in those jobs in poverty. They want to make it a “liveable” wage. Since government transparency has been such a big issue lately, it’s a good sign that the government sees faults and, instead of covering them up, tries to fix them.

The government is also trying to make all contracts “open-book” so that there are fewer loop-holes and complications. As a whole, the government is attempting to make the entire procurement process (e.g. practices, vendor management, procures, and systems) more transparent. Once the procurement process is more transparent, businesses will have greater trust in the government if they decided to do work in government contracting.

Jeremy Higbee is a freelance writer for BidSync, an end-to-end, e-procurment solution.