Just hours before President Obama was to deliver his State of the Union address on Jan. 28, the White House previewed one newsworthy item from the speech: Obama will announce he will sign an executive order hiking the minimum wage to $10.10 per hour for federal contractors' workers in construction and other services industries.
But the impact of the new rate, [White House
fact sheet] which applies to new contracts in effect after the directive is signed, may be quite limited, as far as the construction industry is concerned.
ENR'sThird Quarter Cost Report, published Sept. 30, said the average wage for merit-shop laborers ranges from a low of $13.61 per hour in the Southeast to a high of $16.84 in the Great Lakes region, according to data from the latest Merit Shop Wage and Benefit Survey compiled by Saline, Mich.-based Personnel Administration Services Inc. (PAS).
The ENR Cost Report also noted that hourly scales for union laborers stood at $33.88 for buildings construction and $39.57 for the heavy and highway construction sector in September 2013, according to 20-city average data from the ENR Construction/Economics Dept. Those union figures include fringe benefits; the PAS numbers exclude fringes.
Geoff Burr, Associated Builders and Contractors vice president of government affairs, said in astatement, "This executive order will have little to no impact on our federal contractor members, who already pay higher wages than the president's proposal." Burr added, "This seems to be nothing more than a misleading, political maneuver."
Brian Turmail, Associated General Contractors of America spokesman, says, "Our sense is that the impacts would be largely regional and potentially limited but we're trying to assess that right now."
Turmail says, "Obviously the vast majority of [AGC] members working on federal contracts are paying Davis-Bacon wage rates that are already over $10 an hour." But he adds that in some sections of the country, such as the Southeast, there are wage rates below $10 per hour. In those areas, the new executive order would inflate the cost of certain federal construction projects, he says.
Sen. Tom Harkin (D-Iowa) and Rep. George Miller (D-Calif.) introduced a bill in March 2013 that would raise the overall federal minimum wage to $10.10 an hour, in stages over three years. After that, the bill would increase the wage for inflation. The current federal minimum wage is $7.25.
Harkin's bill, which has the backing of the AFL-CIO, has 33 Senate co-sponsors—32 Democrats and one Independent—which is short of a majority.
Even if the measure moves through the Senate, the plan almost certainly would face strong opposition in the Republican-controlled House.