President Obama has signed an executive order that boosts the minimum wage to $10.10 per hour for federal contractors in the construction and services industries starting in 2015, with further annual increases for inflation, beginning on Jan. 1, 2016. The current federal minimum wage is $7.25 per hour.
Construction industry officials and ENR data indicate that the directive, which Obama signed in a White House ceremony on Feb. 12, will have a limited impact on the industry because, in many cases, hourly construction wages exceed the $10.10 level.
The executive order, which Obama previewed in his State of the Union address on Jan. 28, applies to contracts whose solicitations are issued on or after Jan. 1, 2015.
ENR’s Third Quarter Cost Report, citing the latest "Merit Shop Wage & Benefit Survey" data from Personnel Administration Services (PAS), Saline, Mich., showed the average wage for merit-shop laborers ranged from $13.61 per hour in the Southeast to $16.84 in the Great Lakes area.
A 20-city survey by ENR showed that union laborers’ average hourly scales were much higher in September 2013: $33.88 for buildings construction and $39.57 for heavy and highway construction. Those union figures include fringe benefits; the PAS numbers exclude fringes.
Brian Turmail, Associated General Contractors of America spokesman, said the new presidential directive "will have limited, and mostly regional, impacts on our industry, given that contractors working on federal construction projects already are required to pay Davis-Bacon [Act] wage rates."
Shortly after the State of the Union speech, Geoff Burr, Associated Builders and Contractors vice president of government affairs, said in a statement, "This executive order will have little to no impact on our federal contractor members, who already pay higher wages than the president's proposal."
The White House directive says the wages of workers covered by the construction and services contracts also must be governed by the Fair Labor Standards Act, the Service Contract Act and the Davis-Bacon Act.
The directive adds that, for contracts covered by the Service Contract or Davis-Bacon acts, the directive will apply to contracts and “shall apply only to contracts or contract-like instruments at the thresholds specified in those statutes.”
