Last night President Barack Obama announced during the State of the Union Address his intention to raise the minimum wage for Federal contractors to $10.10 per hour. The President plans to increase the minimum wage through an executive order which will only impact companies doing business with the Federal Government.
The President cannot increase the Federal minimum wage across the country. Only Congress can do that and Congress has shown little interest in making a change to the minimum wage which is currently $7.25 per hour and was last increased in July 2009. Annualized the current Federal minimum wage is equal to $15,080 a year. At last year's State of the Union Address President Obama asked Congress to increase the Federal minimum wage. Nothing happened last year, well congress did their part for the the sequester and government shutdown.
The minimum wage was first established during the Great Depression in 1938 the minimum wage was set at $.25 per hour and has increased over time to $7.25 through acts of Congress. Indexed over the years the current Federal minimum wage has not kept pace with inflation. States can regulate their minimum wage rate which can be higher or lower than the Federal minimum wage. When the State and Federal minimum wages are different employees must be paid the higher wage.
There are nineteen states that are paying more than the Federal Minimum wage. However, no state minimum wage is above $10 per hour, with the exception of California which will increase the state minimum wage to $10/hr in 2016. States seem reluctant to increase the minimum wage.
During the State of the Union Address the President announced other changes through the use of Executive Order as well. Frustrated with Congressional inaction the President is using the State of the Union and Executive Order to message that he will make changes where he can. Will Congress respond?
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