In last night’s State of the Union Address, President Barack Obama announced that he planned to sign an Executive Order requiring that employees of federal contractors be paid at least a minimum wage of $10.10 per hour. This represents a $2.85 increase over the current federal and Pennsylvania minimum wage of $7.25 per hour. Specifically, the President said, "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 should not have to live in poverty."

President Obama’s Executive Order will only impact new and renewed contracts so there will be no immediate impact on federal contractors. According to a report from the Associated Press, more than 90% of federal contractors already make over $10.10 and the Executive Order will only impact about 200,000 workers. It is expected that the President will use this Executive Order in an effort to goad Congress into raising the minimum wage for all American workers to $10.10 over the next three years and then index it to inflation thereafter. The President told Congress that raising the minimum wage for all will "give businesses customers . . . more money to spend. It does not involve any new bureaucratic program. So join the rest of the country. Say yes. Give America a raise."

14 states raised their minimum wage effective January 1, 2014. While Pennsylvania did not raise the minimum wage, neighboring Ohio raised the minimum wage to $7.95 per hour and New Jersey raised the minimum wage to $8.25 per hour. California will raise its minimum wage to $9.00 per hour in July and is scheduled to raise it to $10.00 per hour in January 2016. Washington has the highest state minimum wage at $9.32 per hour and San Francisco comes in with the highest minimum wage in the country at a whopping $10.74.

A recent Associated Press poll found that 55% of Americans support an increase in the minimum wage, 21% oppose it, and 23% are neutral.

Federal contractors and subcontractors should be aware of these new requirements and prepare and price their bids accordingly as they enter into and renew existing contracts with the federal government. All employers should follow the news closely in the coming months as Congress considers increases to the minimum wage nationwide.

In addition to the upcoming minimum wage changes, many federal contractors and subcontractors are aware that beginning on March 24, 2014, in addition to their responsibilities to collect employee and applicant demographic data regarding race, gender, and ethnicity, contractors will also be required to collect demographic data related to veteran and disability status. If you are a contractor and these changes sound completely foreign to you, be sure to attend the McNees Wallace & Nurick seminar entitled "Counting Heads: New Rules That Impact EVERY Federal Government Contractor and Subcontractor." Seminars will take place in Harrisburg, PA on January 30 and State College, PA on February 6. A seminar will take place in Scranton, PA on February 26 (details to be announced soon). See below for more information. To sign up, e-mail us here!