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Raising the Minimum Wage by Executive Order

Dear President Obama,

June 25th marked the 75th anniversary of the federal minimum wage law in the United States, known as the Fair Labor Standards Act. When President Franklin Delano Roosevelt signed this legislation, his vision was to ensure a “fair day’s pay for a fair day’s work” and to “end starvation wages.”

Seventy five years later, there are 3.6 million Americans working for pay at or below the federal minimum wage. More extensively, thirty million low wage workers are making less today, adjusted for inflation, than they did 45 years ago in 1968. They are working for a minimum wage that does not even reach the federal poverty line for a family of three and they cannot afford basic necessities like food, housing, transportation, and health care.

Had the minimum wage simply kept pace with inflation since 1968, it would stand at $10.70 per hour today instead of the current federal minimum wage of $7.25. In that time, the minimum wage has lost nearly one-third of its value while the prices of everything from food to housing to health care have been increasing – often at rates higher than inflation. Each year that the federal minimum wage is not increased, you and Congress are effectively telling low-wage workers that they are not worth as much as they were the year before and each of the dollars they earn gets stretched even further due to the effects of inflation.

Here’s where you can make a decisive executive decision.

Just about a month ago, federally contracted low-wage workers walked off the job and participated in some of the larger strikes the nation’s capital has seen in recent years. Despite the fact that they work indirectly for the federal government, they are still being paid poverty wages – some even explained that they were being paid below the federal minimum wage, which invites your administration’s immediate investigation! This is disgraceful; the federal government should be providing a shining example of fair and just treatment of their contractors’ workers for other employers to follow.

Your executive order to get this done would move closer to FDR’s vision of ending “starvation wages.” Your decision would set a good example for the rest of the business community to follow and provide the type of determined and persistent leadership that our country’s political class has lacked for decades. Especially if you also limit the CEO’s and other top executives’ pay for substantial federal contractors to a multiple no greater than 25 times their entry level wage. (Both famed management guru Peter Drucker and legendary investor Warren Buffett believed in this range as prudent corporate practice.)

According to a recently released report from Demos, a public policy organization, the federal government indirectly employs the largest number of low-wage workers in the country. More even than Walmart and McDonald’s combined. The Washington Post reported that a report from the National Employment Law Project (NELP), surveyed a sample of 567 federally contracted jobs. Seventy-four percent earned less than $10 per hour, 58 percent have no employment benefits, and 20 percent or more depend upon some form of public assistance.

In the absence of any serious movement in this disconnected Congress to increase the minimum wage, you have the potential to exert significant influence on the wages paid to millions of low-wage workers in this country. With a simple executive order, you can fix this shameful deprivation. I urge you to sign an executive order which mandates that federal contract workers be paid no less than $10.70 per hour, which would catch those workers back up with the inflation-adjusted minimum wage they would have been paid in 1968. Is this too much to ask of you?

This is, of course, no substitute for a lasting federal minimum wage increase. But an executive order provides you with an option to avoid the morass in Congress and effect real positive change to millions of low-wage workers’ lives and to effect that change now. I hope that you will recognize and seize this opportunity.

This small but important example will make it easier for you to push Congress for a greater and bolder minimum wage increase than you did in your State of the Union address. Your proposal for a $9 minimum wage by 2015 does not go nearly far enough, remains far below what workers made, adjusted for inflation, in 1968, and doesn’t even match the $9.50 by 2011 you called for five years ago during your 2008 campaign!

On the 75th anniversary of the federal minimum wage, you should sign an executive order raising the minimum wage of those working for the federal government through corporate contractors. It is the federal government’s – and your – responsibility to set the example for the rest of the country to follow.

Not to mention that increasing wages could help spur on a lagging economic recovery. The Wall Street Journal’s story on June 24, “Slow-Motion U.S. Recovery Searches for Second Gear,” discussed how the slow pace of recovery has left businesses and consumers wary. The Economic Policy Institute, in examining Senator Tom Harkin (D-Iowa) and Congressman George Miller’s (D-Calif.) legislation to increase the minimum wage to $10.10 by 2016, estimated that increasing the minimum wage above $10 per hour would provide $51 billion in additional wages during the phase in period for consumers to increase their spending for their livelihoods.

When Franklin Delano Roosevelt signed the Fair Labor Standards Act into law, he showed courage in the face of the Great Depression as well as considerable opposition and criticism from businesses. Is it not time, after four and a half years, for you to leave your mark, to show Americans what type of President you want to be remembered as, and to be a leader on this issue? Millions of workers throughout the country deserve a minimum wage that, at least, catches up with 1968.

I’m sending a copy of this letter to Michelle Obama who is said to have your ear.

Sincerely,

Ralph Nader

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Ralph Nader is a consumer advocate, lawyer and author of Only the Super-Rich Can Save Us! 

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