Wednesday, February 26, 2014

Minimum Wage Hike Set to Boost Federal Contract Workers Income

Recently, the minimum wage for Federal contractors was raised to $10.10/hour by an Executive Order issued by President Obama. The wage increase, slated to take effect on January 1, 2015, is expected to affect hundreds of thousands of contract workers currently receiving minimum wage.  

KRA Corporation salutes the President’s commitment to his word in trying to encourage equity-in-pay in the U.S. workforce. We hope that this acts as a spur to the Federal minimum wage debate as well as impacting workforce development in a positive way.

The minimum wage will then be adjusted annually by the Secretary of Labor based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers.

In his remarks regarding the wage increase, Department of Labor Secretary Tom Perez, said, “The president believes the federal government should lead by example as a model employer, joining so many private businesses that have recognized that paying a fair wage is both the right thing and the smart thing to do.”

The move has drawn criticism from some quarters. The belief is that this will stymie hiring practices instead of promoting them, and that the actual number of people the move will benefit is far less than reported as it only affects new contracts.

However, supporters point to studies that have shown that raising low wages has a positive impact on morale, reduces employee turnover and absenteeism (thereby reducing costs) while boosting overall productivity.  

Just how constitutional the Executive Order is has come under scrutiny from the Supreme Court. Bypassing Congress, the court determined that the President’s “power is at its lowest ebb, for then he can rely only upon his own constitutional powers minus any constitutional powers of Congress over the matter.” It is not something, however, that will unlikely lead to the President rescinding the order.

This Executive Order represents a definitive statement of intent that his administration is committed to improving the overall situation of the U.S. workforce at a building block level and is willing to lead by example.

As an organization dedicated to improving the lives of individuals and strengthening our communities through our innovative workforce development programs, KRA Corporation applauds this move which raises the standard of living for Federal contract workers while offering incentive to our current job seekers.

KRA Corporation is heartened to see the President making good on promises he made during his State of the Union address and we hope that this continues to be a “year of action” in his initiatives for the U.S. workforce.

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