Plumer lists seven actions Obama said he would take unilaterally. The one that has gotten the most attention:
Boost the minimum wage for federal contract workers to $10.10 per hour.This will be phased in slowly, starting in 2015 — the federal government will give preference to companies that pay workers higher wages. This could raise pay for some 200,000 workers, although it will only affect future federal contracts, not existing ones. See here for more details.
All told, it’s a relatively incremental step. Boosting the federal minimum wage to $10.10 per hour, by contrast, would require an act of Congress. (And here’s an earlier look at why economists disagree so much on whether a higher minimum wage helps or hurts unemployment.)
Jordan Weissmann expects this to make little difference:
A mere 16,000 federal employees made the minimum wage or less in 2016, and according to The Wall Street Journal, it’s unclear how many of them were actually contractors. To tabulate the full effect of the hike, you’d have to know how many federal hands-for-hire earn less than $10.10 an hour, but the general point remains: This is a useful, but largely symbolic move.
Jonathan Cohn looks at other data:
A 2013 report from the think-tank Demos (where I used to be a fellow) found that nearly 2 million workers paid through federal contracts and other arrangements made less than $12 an hour. And a 2009 report from the Economic Policy Institute, based on 2006 data, found that about 400,000 workers for federal contractors had wages lower than $10 an hour. And that’s despite laws, like the Davis-Bacon Act, that require federal contractors to pay “prevailing wages” in their communities.
Philip Klein throws cold water:
Though the 2 million figure [from Demos] 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.
Drum wonders about the politics of the executive order:
On the one hand, public support for a higher minimum wage is very broad. On the other hand, this reinforces the widening gap between private sector workers and those who are paid (directly or indirectly) by taxpayer dollars. One side watches its wages stagnate and its standard of living drop, while its taxes are used to fund ever higher wages for the lucky few working for the government.
McArdle seizes on this point:
At a time of great economic insecurity, it’s not great politics to make government workers the “haves” of the labor market: paid above-market wages and shielded from the chronic risk of job loss that most of the rest of America faces. Oh, sure, this is true for everyone — professionals often have to take a pay cut to work for the government. But to the average person sweating it out through rounds of layoffs at a job they don’t like very much, government workers seem to have it very good by comparison.
Jay Richards is against the executive order:
In many parts of the U.S., such as the Washington, D.C., metro area, it would be tough to provide for a family of four with one full-time job that pays only $10.10 an hour. So why does the president not call for raising the minimum wage for all workers to, say, $50 an hour? Because such a policy would lead to massive and demonstrable unemployment among those whose labor is worth less than that. The fact that the president is calling for a minimum wage of only $10.10 an hour suggests that he understands these economic realities can’t be dissolved by executive order. The proposed wage hike would still harm the least-skilled workers, but at $10.10, that harm will be much harder to identify.
Ryan Avent looks at the mixed research on raising the minimum wage:
Under what assumptions can forcing a business to pay a higher wage be good for its business? The White House press release, which also cites the example of retailer Costco which pays well above the minimum wage, seems to invoke efficiency wage theory. This theory, which incoming Federal Reserve chairwoman Janet Yellen helped develop, suggests firms may pay above the market-clearing wage because to pay less would damage morale and productivity and raise turnover. This theory can certainly explain why some firms, such as Costco, sometimes choose to pay above the market wage. But it cannot justify forcing all firms to do so all the time. This would presume that numerous firms are systematically hurting themselves through their small-minded refusal to pay more. Sure, there are situations where people can be forced into doing something that makes them better off (wearing a seatbelt, getting vaccinated) but is it plausible that WalMart or McDonald’s know their own business so poorly that they are systematically hurting themselves by paying too little?
Finally, Christopher Flavelle notes that raising the minimum wage is a really low priority for the public:
So long as the public rates aiding the poor so low on Washington’s to-do list, Republicans will continue to calculate that blocking a higher minimum wage carries no significant political cost — even if a majority of Americans say they support raising the minimum wage.
The Dish 