By Dick Miller
WE.CONNECT.DOTS: Barack Obama gave his sixth State of the Union speech last week. For the last five years, we hoped to hear the President we voted for, not the President he is.
This year was even more disappointing. The performance of this Administration is just punishment for those who supported Obama over Hillary. Hillary had been adequately scrutinized, even by 2008, while Obama was largely unknown.
The President is going to require Federal Contractors to pay a minimum wage of $10.10 an hour. He claims this is the best he can do because Congress will not budge on the outdated $7.25 per hour that has been the law of the land since 2009.
Did the President belatedly discover what we already knew? People who benefit by keeping the minimum wage low write campaign checks to our lawmakers. People paid that lowly sum, do not.
Three concerns about Obama’s Executive Order:
1. Of course, this requirement does not apply to existing contracts. The rule may never affect between a quarter and a half of all Federal contracts termed “open-ended” with provisions for “indefinite delivery and/or indefinite quantity.” This type of contract has been popular with both Republican and Democrat administrations as a way of convincing taxpayers that less direct employees must mean smaller government.
2. Ordering Federal contractors to pay higher wages obviously will increase the cost to taxpayers for their goods and services, if . . .
3. We can find enough Federal contractors that pay wages that low. Why would any civilian want to cook or clean toilets for minimum wages in a combat zone when they can earn the same at a Burger King in Miami?
We are aware of one defense contractor in Western PA paying plant workers minimum wage. The company, founded in 1981, supplies “tactical munitions and crowd control devices to armed forces, law enforcement, corrections and homeland security agencies.” Planning to expand, company executives are currently shopping economic development programs for handouts. The expansion will mean 100 more low-paying jobs in the area with politicians falling all over each other to be in the ribbon-cutting photo.
Was the President serious about this State of the Union “headliner” for 2014? Research of the second concern indicates otherwise. Sam Pizzigati, an associate fellow at the Institute for Policy Studies, provided this scenario last year, before Obama even announced this “program.”
The substance is that the Federal government could limit the amount paid to executives of companies that hold government contracts and use the savings to pay the workers more.
Pizzigati used other researchers to identify “560,000 Americans employed by contractors in jobs that pay $12.00 an hour or less.” Executives of these companies do quite well. Federal regulations currently allow our tax dollars to reimburse private firms for up to $763,039 of executive compensation. “This amount will shortly rise to $950,000 under the formula current federal law sets out,” he writes.
The researcher notes that if the Feds only permitted executive compensation equal to that of Vice President Biden ($230,700), the savings would allow these companies to give every worker currently making under $12 an hour a pay raise of $6.00 per hour.
Robert Hiltonsmith and Amy Traub conclude: “We are bankrolling the paychecks of already-wealthy executives instead of supporting more livable wages for American workers struggling to get buy.” They are the analysts at Demos, a New York-based think tank, who crunched these numbers.
Bottom Line: Real politics wins out over populist movements. None of the above is taken seriously . . . even by the President of the United States.
