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Amy Traub: Obama’s $10.10 minimum wage hike is a clear victory for hundreds of thousands of workers of new or renewed contracts but will still exclude a large group once enacted next year

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JESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I’m Jessica Desvarieux in Baltimore.

During his State of the Union address, President Obama announced an executive order raising the minimum wage for workers of new or renewed government contracts.

Joining us now to discuss this hike is Amy Traub. Amy is a senior analyst at Demos and coauthor of Underwriting Bad Jobs: How Our Tax Dollars Are Funding Low-Wage Work and Fueling Inequality.

Thanks for joining us, Amy.


DESVARIEUX: So, Amy, in your report, you claim that taxpayer-funded government contracts are fueling low-wage work and inequality. Can you just summarize some of your findings?

TRAUB: Certainly. So in our study that my colleague Robert Hiltonsmith completed earlier this year, in 2013, we find that the federal government really is the largest low-wage employer in the country, in a sense, through not just federal contracts, but also federal health care spending, a variety of different leases of government land, concession agreements, building contracts, that the federal government is responsible for fueling over 2 million or nearly 2 million low-wage jobs.

Now, these are not all jobs that President Obama could actually directly affect. It’s really the federal contracts that he has the opportunity to make a difference with an executive order.

DESVARIEUX: Okay. But, you know, you have a lot of people saying this $10.10 minimum wage hike is a big victory. But of the 2 million employees of federal contractors, how many will be excluded in this executive order because it only applies to new or renewed contracts? Is that right?

TRAUB: Well, so the 2 million is actually not just federal contract workers, and those are employees that are–their jobs are in some ways funded by the federal government. But actually the president does not have the power to lift wages for all of those workers.

For contract workers, we find that it’s about 560,000 federal contract workers who make $12 or less an hour.

DESVARIEUX: Okay. So we’re talking about hundreds of thousands of people who could be potentially affected?

TRAUB: We are talking about hundreds of thousands of people who could be potentially affected by an executive order that would raise wages to $10.10 an hour for workers who are currently earning less than that and are working on federal contracts.

DESVARIEUX: Okay. So just so I’m clear, I want to make sure that even current contracts, those who are making the current federal minimum wage, or if they work in the district, for example, making the District of Columbia’s minimum wage, those workers will not be affected by this order?

TRAUB: Well, they will ultimately be affected when the time comes for their contracts to be renewed or reissued.

DESVARIEUX: Okay. But as of, let’s say–it’s not like tomorrow they’re going to see their paychecks go up a couple of dollars per hour.

TRAUB: Unfortunately, it’s not, and that’s because those contracts have already been negotiated, signed, and agreed to. And in order to renegotiate them, you know, it has to be the time when the stipulations of that contract can be renegotiated.

I do think this is still, though, a major victory for low-wage workers, what the president can do with his executive power. That really is out there for Congress to raise the minimum wage for all low-wage workers in this country. And that would be not hundreds of thousands of workers, but it would affect as many as 27 million workers.

DESVARIEUX: Alright. Amy, let’s move on and talk about this $10.10 an hour for employees of federal contractors. Do you see this as actually being able to raise people out of poverty? Is it a living wage, essentially?

TRAUB: I would not say that $10.10 an hour is a living wage. On the other hand, you don’t want to discount that for somebody who may be making $7.25 an hour, what that would mean to go up to $10.10 an hour. It is enough to lift some families out of poverty.

DESVARIEUX: But do you feel that the majority of the people now will be lifted out of poverty because of this change?

TRAUB: Well, we’re looking at families who are working and who are in poverty. Now, people have different types of situations. They have different family sizes. They have different hours on the job. There are a lot of part-time workers who don’t get 40 hours a week and don’t have that opportunity to earn that much. So it’s difficult to say exactly how many people will be lifted out of poverty by–because we only have a–don’t have a concrete sense yet of how many workers exactly will be affected by the federal contracting.

DESVARIEUX: Okay. And why is that? Why don’t we have a better sense of that?

TRAUB: I think that the details are still being worked out by the administration.

DESVARIEUX: Okay. That’s fair enough.

Alright. Amy Traub, thank you so much for joining us.

TRAUB: Thank you.

DESVARIEUX: And thank you for joining us on The Real News Network.


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Amy Traub is a Senior Policy Analyst at Demos, a non-partisan policy research organization. She has a broad research focus on I focus on jobs & job quality, consumer debt, policies to support & expand the middle class and is co-author of the 2013 study “Underwriting Bad Jobs: How Our Tax Dollars Are Funding Low-Wage Work and Fueling Inequality.” You can follow Amy on Twitter at @AmyMTraub.