The executive order President Obama signed today on the minimum wage increase for workers employed by federal contractors is a very big deal, far bigger than even most progressives realize. Substantively, symbolically, politically, this policy change will have ripple effects for years to come, which will only widen if a Democrat stays in the White House after Obama's term ends.
I say this as someone who has been disappointed with some of Obama's economic policies. His administration has been far too weak on holding Wall Street accountable, has opposed a much-needed financial transactions tax, and could have done far more to force write-downs of underwater mortgages. His proposal to cut Social Security benefits are wrong, as is his willingness to make federal workers take pay freezes and pension cuts. His embrace of so much in the way of domestic budget cuts has been disappointing. His policies on international trade are downright awful. In general, his record in terms of taking on income inequality has often fallen far short of his rhetoric.
But on this executive order, the president has done it right. This wasn't just a simple provision raise the minimum wage: On decision after decision within the document, the president made the right call. It indexes the minimum wage for these workers to inflation, meaning there will be yearly wage increases. It covers individuals with disabilities, ending the practice of many government contracts going to companies that pay those with disabilities a sub-minimum. Most importantly, given the big numbers of fast food companies that contract with the federal government, and given the extreme exploitation due to the $2.13 minimum that waitresses and waiters get paid if they get tips, the executive order includes specific provisions helping food industry workers by raising the tipped minimum wage.
When the president announced in his State of the Union that he would be signing this executive order, none of these provisions were spelled out. They were all controversial, and there was considerable doubt as to what decisions the president would make. And it is important to note the major role the disability movement, the food worker movement, the labor movement, and the progressive movement in general had in making these decisions happen -- the organizing, the networking, the media strategy, the inside game was all critical in making the White House understand how important these issues were to people.
So why is this so important? Well, obviously, it matters enormously to the hundreds of thousands (and down the road, as new contracts get negotiated in years to come, millions) of workers getting significant wage increases for the first time in many years, with more increases every year from here on in. It matters to their families, to their communities, and to the businesses in their neighborhoods for these workers to get a little more spending money. It matters to taxpayers who won't be on the line to be giving government benefits to workers who are still in poverty despite all their hard work, and to all of us who get government services from these workers, who studies have proven will be more productive and have less turnover because of their higher wages.
Beyond these immediate impacts, though, this executive order will have three other big ripple effects in the years to come.
First of all is the symbolic importance of the first president to issue an executive order to specifically benefit low wage workers since FDR is big all by itself. It raises the stakes for future Democratic presidents to do the same thing, and it raises the stakes for Obama himself to do even more. It signals the media that this issue is important to the president, and helps keep the conversation about low wage workers and income inequality on the table. And it sends a huge shot across the bow to the thousands of businesses seeking contracts and procurement from the federal government that they better start thinking about how they are treating their workers.
Second, it increases the pressure on the corporations paying low wages to do better. When the government sets standards and expectations for the economy, corporate America has to pay attention -- that is a big part of the reason changes in business practices happened so quickly in terms of civil rights when the government started changing the laws. And it encourages organizing by workers: When McDonald's workers at Union Station are paid quite a bit better than those down the street, they start talking to each other and asking why. All of the organizing work being done by Walmart workers and fast food workers in recent years will be enhanced by this executive order.
Third, this is a big deal politically. Beyond the speeches, beyond the talk of Democratic politicians, this executive order lays down a marker that the Democrats are on their side. This raises the stakes on the minimum wage issue, and makes it incredibly obvious that Democrats are willing to do something about it and Republicans don't want to. This makes minimum wage a front and center issue for Democrats in 2014, and that is a great thing for our party given the popularity and passion surrounding the issue.
As someone who has spent years working on getting President Obama to sign this executive order, and who had big doubts about whether it would ever happen, this is a great day for me. But far more importantly, this is a great day for low-wage workers in America. Not just those immediately affected by this, but those who will be touched by the ripples of hope coming from this action.