Executive Orders: Obama’s New Tool for Boosting Minimum Wage?

Low-wage, non-union employees of Wal-Mart (NYSE:WMT) and fast-food chains like McDonald’s (NYSE:MCD), Wendy’s (NASDAQ:WEN), and Burger King (NYSE:BKC) — the giants of the post-financial-crisis economy — drew attention to the issue of America’s minimum wage by striking throughout 2013. Union strategists had hoped the presidency of Barack Obama would set in motion a transformation of the labor law regime by passing legislation to make Wal-Mart’s revenge firings illegal and to increase the federal minimum wage. Obama began 2013 by proposing in his State of the Union address a $1.25-per-hour increase to the $7.25-per-hour federal minimum wage, along with a plan to index minimum wage to inflation. In support of that increase, he explained that, “Employers may get a more stable workforce due to reduced turnover and increased productivity” as a result.

However, Obama’s attempts to increase the United States minimum wage through legislation stalled in Congress, and instead, he plans to use the president’s executive powers to address the issue of low wages, at least for a small sector of the American population. As the White House announced Tuesday — hours before the president will make his fifth State of the Union address — Obama will issue an executive order to increase the minimum wage for new federal contract workers. “In the State of the Union Address, the President will announce that he will use his executive authority to raise the minimum wage to $10.10” for all workers employed under future government contracts, stated the White House fact sheet, announcing the wage increase. According to the release, Obama’s action will help “hardworking Americans” like those washing dishes, serving food, and doing laundry on American military bases.

During the January 27 briefing, White House Press Secretary Jay Carney gave a preview of Obama’s motivations for using an executive order to boost minimum wage. “The President has embraced the idea in the past that he can use his authority as President and the powers available to the President to advance his agenda on behalf of the American people,” White Carney explained. “What we have said is that he views 2014 as a year of action and that he has tasked his team to come up with new ways in which we can — he can — advance that agenda. And that includes legislative proposals and advances, as well as ways that we can move the country forward and expand opportunity and reward hard work through either executive action, signing executive orders, or through using the bully pulpit — or the modern bully pulpit, the phone — by bringing people together around an issue so that it gets the focus that a White House event or endorsement can give you.”