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In his State of the Union address tonight, President Obama is expected to renew his call for Congress to raise the federal minimum wage. If he's successful, that would eventually boost the paychecks of some 27 million people. In the meantime, the president will announce that he's taking immediate action to help a small fraction of those low-wage workers, the ones employed by federal contractors. NPR's Scott Horsley reports.
SCOTT HORSLEY, BYLINE: President Obama's State of the Union speech last year ran almost exactly one hour. During which time, a minimum wage worker would earn $7.25. In 2013, the president said that's not enough.
(SOUNDBITE OF ARCHIVED SPEECH)
PRESIDENT BARACK OBAMA: Let's declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty and raise the federal minimum wage...
HORSLEY: Congress didn't act on that request last year, so tonight the president will repeat it. He'll also order that, from now on, companies signing new contracts with the federal government will have to pay their workers at least $10.10 an hour. White House adviser John Podesta told NPR's MORNING EDITION the order is part of a broad strategy to make greater use of the president's executive powers when Congress refuses to act.
JOHN PODESTA: We'll also work with mayors and governors who are trying to raise the minimum wages in their states and cities. But if we do - all do our job, I think that Congress could get around to raising the minimum wage for every American worker. And it's long overdue, and it's the fair thing to do.
HORSLEY: Twenty-one states already have minimum wages higher than the federal government's. And this year, more than a dozen state and local governments will consider additional increases. Christine Owens of the National Employment Law Project says, in some cases, state and local lawmakers will decide whether to raise the wage. In other places, it will be up to the voters.
CHRISTINE OWENS: We traditionally win these ballot measures because the public strongly supports raising the minimum wage.
HORSLEY: Owens argues the increased cost to employers of having to pay workers more is partly offset by reduced turnover and improvements in morale and productivity. She notes when the state of Maryland required its contractors to pay a higher wage, more companies actually started bidding on government work.
Low-ball employers were no longer able to compete by driving wages down, and so some of the better employers who pay better wages were more eager to compete for public contracts. So it actually increased the number of bidders and increased the quality of bids.
The president's executive order applies only to new government service contracts. The workers affected include contractors washing dishes or doing laundry on U.S. military bases. Critics argue raising the minimum wage will simply force employers to hire fewer workers or shorten their hours. David Neumark is an economist who studies the issue at the University of California at Irvine.
DAVID NEUMARK: The minimum wage creates winners and losers. Obviously, if you keep your job and/or you don't have your hours reduced, you're obviously making more money. And that's a good thing. But there is some job loss associated with minimum wage increases. And it falls on, of course, the people we are trying to help, these skilled low-wage workers.
HORSLEY: Supporters of a higher minimum wage say those warnings are overblown. Economist Jared Bernstein of the left-leaning Center on Budget and Policy Priorities says, in the past, modest wage hikes have not taken a big toll on employment.
JARED BERNSTEIN: That doesn't mean that no one ever loses a job or has their hours cut back. But what it does mean is that the beneficiaries far, far outweigh anyone who's hurt by the policy.
HORSLEY: The federal minimum hasn't increased in four and a half years. The president would also like lawmakers to OK an automatic cost of living adjustment so future wage hikes aren't stymied by a political standoff in Congress. Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.