For the past few years, our country had been rife with debate over whether to raise the federal minimum wage. Many Americans feel that the current minimum wage is too low — if our country’s lowest paid workers aren’t in poverty, they at least have a very low standard of living. Due in part to the low minimum wage, the number of impoverished and nearly impoverished families is extremely high.
According to the National Center for Children in Poverty, almost a quarter of our country’s children live below the federal poverty line. Many feel this just isn’t right and that it’s our lawmakers’ duty to increase the standard of living for these families.
Recently, President Obama has given some families reason to hope for a better future. Due to the setbacks he’s faced in passing proposals for a higher minimum wage in Congress, the President has decided to take matters into his own hands. By executive order, in the future new federal contract employees will be paid a minimum of $10.10 an hour for their work. Here are some of the ways this decision will affect the nation, in addition to some responses to the legislation.
Effect on Workers
Under the new law, workers who would be paid the federal minimum wage of $7.25 an hour will receive almost $3 per hour more. Blue collar workers such as custodians and construction workers will be most affected by the decision. Right now, it is difficult to say exactly how many people the order will impact. The House of Representatives did not release estimates as to exactly federal contract workers receive minimum wage.
However, an independent group called Demos calculated that around 560,000 people who work under federal contract make $12 or less an hour. Another group, the Economic Policy Institute, estimates President Obama’s order will not affect more than several hundred thousand workers.
Is It Enough?
Some who support an increased minimum wage believe President Obama’s order isn’t enough. The order will only apply to new and renewed government contracts, meaning it will affect relatively few people even in government. Federal hourly workers and those employed under old contracts will not be subject to the new minimum.
Accordingly, some believe that President Obama’s decision, while admirable, does not make enough of an impact. Some are even suggesting that executive order may mean more harm than good in the crusade for higher wages. They believe by signing the executive order, the president is suggesting that he may be unwilling or unable to carry out the battle with Congress.
Will it Cost Jobs?
Those who oppose increases to the minimum wage often do so because they fear it will cost jobs. After all, if a contractor only has a set number of dollars allocated to a project, they may not have the funds to pay everyone a higher rate. The contractor may have to hire fewer people to make ends meet.
As mentioned above, the executive order will affect relatively few people around the country. However, if further wage increases should occur, employers may be forced to cut staff, which would increase the unemployment rate and harm the economy.
Some members are especially worried about the economic impact of the order in light of President Obama’s universal healthcare act. Some parts of the Universal Healthcare Act have put a dent in the economy, even if they are growing pains that will eventually go away. Higher wages may also mean more federal dollars will be spent, which could ultimately augment the recession.
The Future
Whether or not more workers will be subject to a higher minimum wage remains to be seen. If enacted, a $10.10 an hour minimum would mean 17 million Americans would be paid higher wages, unless employers eliminated their jobs. Another 11 million would also receive a higher wage after the pay ladder was recalculated. Workers in a wide range of industries, from home fitness to SEO, could receive a raise.
As a result, millions of people could build a better life for themselves and their children. In any case, the country will eventually need to find to a way to get out of the recession, and energizing millions of workers with higher pay could be the ticket. After all, if people were given the means to bring themselves out of poverty, the country may eventually find itself in an economic boom.