Wall Street Journal Hides Precedent Behind Obama's Minimum Wage Order


The Wall Street Journal misleadingly attacked President Obama's decision to boost the minimum wage for federally contracted workers as an "ostentatious display of President Obama's intention to end run lawmakers and even the law," ignoring the fact that previous presidents set precedent for this type of action.

In his January 28 State of the Union address, President Obama announced plans to issue an executive order that would require "federal contractors to pay their federally-funded employees a fair wage of at least $10.10 an hour." As he said, "if you cook our troops' meals or wash their dishes, you should not have to live in poverty."

The Wall Street Journal's editorial board responded to the president's announcement with the suggestion that Obama was acting like a "king" who "seems to think is a [sic] Democracy of One, or shall we say The One." The editorial attacked the president's plan as "the latest ostentatious display of President Obama's intention to end run lawmakers and even the law" and went on to deny the fact that increases in the minimum wage carry economic benefits or have any bearing on the "economy and efficiency" of the federal contracting process.

But the Journal ignored the fact that Obama isn't the first president to issue this type of order. Presidents John F. Kennedy and Lyndon B. Johnson took similar action to increase equal opportunity and nondiscrimination standards for federal workers. As The New York Times Taking Note blog reported:

Other presidents have used executive orders to upgrade labor standards for employees of federal contractors, including President Kennedy, who required federal contractors to have companywide equal employment opportunity plans, and President Johnson, who prohibited racial discrimination and other bias in hiring by federal contractors.

The non-partisan research center Demos has pointed to executive orders that "have mandated that companies working on behalf of the American people are upholding high standards of employment practices" and further detailed presidential precedent:

From the 1931 Davis-Bacon Act to Executive Order 11246 of 1965, and a host of other laws and executive actions, our laws have mandated that companies working on behalf of the American people are upholding high standards of employment practices. Yet as the nature and prevalence of federal contracting, lending and grant-making have changed, and some laws have been weakened, working people have fallen through the cracks.


In the past, presidents have used their authority to improve job opportunities for Americans working or seeking to work for federal contractors. For example, starting in 1941, successive administrations issued executive orders to fight employment discrimination in the contracting workforce. This effort culminated with President Lyndon Johnson's signing of Executive Order 11246, mandating equal employment opportunity and affirmative action for all individuals working for federal contractors. An executive order to raise and enforce workplace standards for contractors, grantees, and other private companies that do business with the federal government would follow this powerful and effective precedent.

Furthermore, the Journal's claim that a minimum wage increase would hurt businesses and doesn't affect the "economy and efficiency" of federal contracting flies in the face of the hundreds of economists around the country, including numerous Nobel Laureates, who have come out in support of such a plan.

Increases in the minimum wage have not been shown to significantly damage the job market. In fact, businesses that have chosen to boost employee wages have reaped economic benefits. As the Harvard Business Review found, "[i]n return for its generous wages and benefits, Costco gets one of the most loyal and productive workforces in all of retailing, and, probably not coincidentally, the lowest shrinkage (employee theft) figures in the industry [...] Costco's stable, productive workforce more than offsets its higher costs." According to the Economic Policies Institute:

[T]he weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front.

Image via The All-Nite Images using a Creative Commons License

Posted In
Economy, Jobs, Wages, & Unemployment, The Presidency & White House
Wall Street Journal
The Wall Street Journal
Minimum Wage
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