By Robbie Ward
TUPELO – Some of Mississippi’s 350 businesses with $161 million in current federal contracts will be affected by President Barack Obama’s plans to increase minimum pay per hour by 39 percent for employees paid with federal money.
But just how many state businesses currently contracting with the federal government and how many future Mississippi companies will be impacted by the imminent change isn’t known.
The president announced during the State of the Union speech Tuesday that he supports Congress increasing the national minimum wage 39 percent higher an hour than Mississippi’s minimum wage. Until that happens, he plans to use executive power not requiring congressional approval to raise workers’ pay to that level.
“In the coming weeks, I will issue an Executive Order requiring federal contractors to pay their federally-funded employees a fair wage of at least $10.10 an hour – because if you cook our troops’ meals or wash their dishes, you shouldn’t have to live in poverty,” Obama said.
This change applies to new federal contracts from the date the president issues the executive order, so it will not impact current federal contractors or their employees.
The president’s chief spokesman estimated Thursday a “couple of hundred thousand” employees nationally will likely be impacted by this wage change.
Among the 1,213 federal contracts active with Mississippi companies, services and goods provided included a number of employees likely receiving minimum wage. Some include housekeeping, food production, garbage collection, custodial work, and general labor.
Most experts in federal procurement and contracts agree this pay change could make a significant difference in the lives of workers who will gain a boost in pay, nearly $3 more per hour that can translate to nearly $6,000 more annually in pre-tax income.
However, not all of them currently working for the contractors may still have a job.
Trevor Brown, interim director of the John Glenn School of Public Affairs at Ohio State University, believes the minimum pay hike will have little impact one way or another for businesses or the government, but hiring could tighten.
“Firms will likely look for ways to increase productivity out of existing workers and forego new hiring or will make minor reductions in their workforce,” he said.
David Van Slyke, a professor business and government policy in the Maxwell School of Citizenship and Public Affairs at Syracuse University, said federal taxpayers will likely pay more for contracts.
“…undoubtedly, a wage increase will lead to higher costs,” he said. “And, some of those costs will be passed on to public agencies contracting for goods and services,” Van Slyke said.