Fed Contract Minimum Wage Hike Planned

WASHINGTON (CN) - The Department of Labor proposed a $10.10 minimum wage for employees of federal contractors, Tuesday.

The proposal was in response to President Barack Obama's February executive order for the department to raise the hourly minimum from $7.25 to $10.10. The minimum wage is expected to become effective Jan.1, 2015.

"Raising the pay of low-wage workers increases their morale and the productivity and quality of their work, lowers turnover and its accompanying costs, and reduces supervisory costs," the president wrote in his order. "These savings and quality improvements will lead to improved economy and efficiency in government procurement."

The new minimum wage would only apply to new contracts. Because around 20 percent of federal contracts start each year, the department estimates it will take five years for the rule to become fully implemented.

The department estimates that 21 percent of federal contractors' employees earn $10.10 an hour or less.

The proposed wage increase would help reduce absenteeism and worker turnover, and in turn increase productivity, the department said.

The department also anticipates "the quality of government services to improve" with a raise of minimum wage. "In some cases, higher-paying contractors may be able to attract better quality workers who are able to provide better quality services, thereby improving the experience of citizens who engage with these government contractors," the department wrote.

Comments on the proposed rule can be submitted by July 17.

In the past year, federal contract workers have gone on strike in places such as the Pentagon and the Smithsonian Museums over what they call "poverty wages."

Members of the non-profit Good Jobs Nation wrote a letter to President Obama and Labor Secretary Tom Perez, claiming responsibility for the strikes and urging them to go beyond this rule and require contractors to bargain with workers for fair wages.

"In addition to poverty pay that makes supporting a family extremely difficult, we lack affordable health benefits as well as paid time off necessary to care for our children," the letter said. "We are also routinely given too few hours to make ends meet, and unpredictable scheduling practices make it virtually impossible for us to maintain stable child care or go to school."

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