President Obama will sign an order Wednesday that requires businesses with government contracts to pay
their workers a minimum wage of $10.10 per hour starting in 2015. It will apply
to those with new or renewed federal contracts and raises the minimum wage for
these businesses from the current federal minimum $7.25 per hour.
The federal contract requirement
was pushed by Democrats who feared that lawmakers would not move quickly to
raise the minimum wage to $10.10 for all workers, not just those working for
businesses with federal contracts.
The order will affect
less than 500,000 workers, but the hope is to spur Congress to mandate an
increase in the minimum wage for all American workers. Advocates of the move
say it will have positive effects including an increase in productivity, lower
turnover, and that it can help lift working families out of poverty.
Tipped workers
employed by businesses with federal contracts would also benefit. Currently
workers who receive tips are paid a required minimum base of $2.13 an hour. The
order would raise that base to $4.90 and increase it by 95 cents a year until
it reaches 70% of the regular minimum wage. If a worker's tips on top of that
don't add up to $10.10 an hour, the federal contractor will be required to make
up the difference.
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