Obama Signs Executive Order to Raise Minimum Wage in New Federal Contracts

Future government contracts will see an increase in the minimum wages paid to workers.
3:00 | 02/12/14

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Transcript for Obama Signs Executive Order to Raise Minimum Wage in New Federal Contracts
Hello this is tired and is in New York with an ABC news digital special report with a stroke of the pen. Couple 100000 Americans are on their way there will be on their way to getting a raise President Obama. About to make good on a promise from his State of the Union Address raising the minimum wage. For federal contract workers starting next January that wage for most of those workers jobs. From seven dollars and 25 cents an hour to ten dollars and ten cents an hour joining me now ABC news political director Rick Klein. Rick it's not to match the pay raise that that is significant here and raising eyebrows it is how the president went about making it happen. That's right in executive action which means no congressional approval necessary or sought for that matter -- cornerstone. Of the president's State of the Union Address for a few weeks ago you're right the number of people impacted this relatively minor at the White House can't even say. An exact number it only applies the mutual federal contracts. As they are awarded in sports the vast majority of workers to make more than 1010 hour already. But the point here is the president is acting. Even though he knows congress is not acting and in spite of the fact that he knows that it -- bid to raise the minimum wage federally to 1010 an hour. Is likely headed just about nowhere on Capitol Hill. Now the president made a number of promises in terms of executive orders in the State of the Union Address this is the first time he is. Acted on that and we have a lot of push back -- Wall Street Journal an editorial appeared shortly after the State of the Union Address. Texas senator Ted Cruz railed at what he described as an imperial presidency complaining that Obama is ignoring the rule of US law. What do we make of -- argument here is his political posturing or a valid points. Well -- does not have much standing when it comes to setting minimum wage on the federal contract he does have that authority as the as the chief executive and he's able to set that that number without the approval of congress symbolically I think he's got a larger point and it could be some other actions president takes that that rub up against the constitutional limits. But in this case the I think senator -- point -- I think it's a well taken -- in the congressional point of view if you wanna work together and -- the same time you're you're you're going around congress and doing things you know congress wouldn't approve up. Those are two things that are hard to merge together so this is something that the president he's come under pressure on his left to try to do because it's one of those things he can do unilaterally. Even know doesn't have a huge impact he's hoping that employers in the private sector look at this and he's hoping that has become such a popular write him. But maybe you get to move congress along with. As we see that stage start to fill up with. Presumably -- federal workers that will be affected by this executive order. We consider again the number of people that would be helped by the order not a lot at least not at first because this we'll take ninety I didn't feel history but now let me stop there because we do have -- -- -- -- Welcome the White House everybody. No. And -- yet to come here before year. Go by some shovels and salt. -- it sounds like we may get old snow but. But I very much -- by being here I want to thank. First and foremost. The workers war would -- here this afternoon. And I want to thank you champions for all hardworking Americans we've got secretary of labor -- Torres. We're a good -- Outstanding congressman who's used to smokers from Minnesota congressman -- out. Now it's been just over two weeks recycler -- State of the Union Address. And I said this -- would be a year of action. And I meant to. Over the past fourteen days -- order. And across the board reform of our job training programs to train folks. With the skills that employers need and -- match them up with good jobs that are rated -- -- right now. I've directed the treasury to create something we're calling mine are eight to like an IRA but it's my IRA. And and and that's a new way. For Americans to start saving for retirement and you can start with -- -- point five to two dollars. And start. Building up a little bit of an aspect. And get tax benefits for doing so. -- we've -- the leaders of some of America's biggest. High tech companies to help us make sure that all of our kids have access to high speed Internet and up to date technology in their classroom -- that. They're learning the skills that they need for the new economy. -- we brought. -- together business leaders were committed to hiring. More unemployed Americans. Particularly long term. Unemployed. Who oftentimes are discriminated against. In other catch point to -- had a job for a while. And then the employers are willing to look at the ResMed because. -- -- the job for one. Some point is. I'm eager to work with congress. Whenever I can find opportunities to expand opportunity for more families. But wherever I can act on my all without congress. By using my pen to take executive actions or. -- up the phone and growling folks around a common cause that's -- -- to -- And that brings -- visual room talk about today. After the worst economic crisis in generations our economy has been growing for the past four years. Our businesses have created. Eight and a half million new jobs. Unemployment rate has come down. But while both of the top -- doing better than ever corporate profits have been higher stock market has been high. Average wages have barely -- -- you got too many Americans who work working harder than ever before just to get bot but they can't seem to get ahead. Can't seem to. Make all the ends -- And that's been true since long before the recession hit. We've got to reverse those trends we've got to build an economy. That works forever but not just the fortunate few. And we've got to restore opportunity for everybody. Submit no matter who we are -- -- matter. -- you started out no matter what you look like no matter what your last name as you can get ahead in America -- on the work hard and take responsibility for your life. -- but certainly agenda laid out there's gonna help us do just that. Part one of this -- has more new job that -- a good wage jobs in manufacturing. And exports. Energy and innovation. Part two we've got to train the folks. With the skills to fill those jobs. Part three -- make sure every child gets world class education. And part -- We've got to make sure that the economy rewards hard work for every America. Making hard work pay ball. With the economic security and decent wages and benefits. As well we're about here today. It means making sure women earn equal pay for equal work. Sure workers have the chance to save for a dignified retirement. That means access to affordable health insurance that gives you the freedom to change jobs or be your -- boss and the peace of mind. It'll be there for you when he gets elected you need it most. If you know anybody doesn't have health insurance -- -- -- -- -- Web -- work and. Sign him up. You get health care for less than. Your cellphone bill for a lot of folks. But it also means that in the wealthiest nation on earth. Who works full time should have to live in -- Help -- He knows one you're go to bed. When your -- -- the that I first ask congress to raise the federal minimum wage. A federal -- ways -- in real terms is worth about 20% last. But it was when Ronald Reagan. Took office. 40% wants a fifth last. So this afternoon -- invited some of the folks who would -- race. If we -- that federal minimum wage. -- happened join me here at the White House. And like most workers in their situation. Not teenagers they look like it is some -- very young. But they're not taking -- -- taken on their first job there adults. Average age is 35 years old. A majority of lower wage jobs are held by women. Many of them have children of their supporting these are Americans who work full time often to support -- family. And if the minimum -- had kept pace with our economic productivity. -- getting paid well over ten dollars an -- Instead the minimum -- is still just seven point. And when congress refuses to raise their. It loses value because his little bit of inflation everything else starts cost and -- bit more in the know inflation's been pretty low. It still cost and -- bit more each year that means. Each dollars in -- -- they've got a little bit -- So over the past year the failure of congress to act. Was the equivalent of between 200 dollar pay cut. For these folks for a typical minimum wage worker that's a month worth of groceries. Every two months worth of electricity. It makes. A big difference for a lot of cramps. Now the good losers. That in the years since I first asked congress to raise the minimum wage six states went ahead and passed laws to raise -- Got more states and cities and counties that are taking steps to raise their minimum wage as we speak. And a lot of companies -- -- -- to. Not out of charity but because they've discovered it's good business. -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Its stock has done great. It's expanded all over the place. But their philosophy is hot higher wages are -- way to boost productivity and reduce journal. If employees are happy and feel like the company is invested in them than they're gonna do more for the company. They're gonna go above and beyond. And and I know what I was over the Costco store I -- mean folks who started office. The cash register and you know now or. In supervisory positions that have been there for twenty years and you could see the kind of pride that they had the company because the company. Cared about them. I received a letter the next -- -- woman who solved my visit on TV issues that fly delta gospel. Settle up Lebanon and let me apply for a job customers. -- would like -- good job. So across the country owners of small and large businesses are recognizing the fair wages -- higher profits. Go hand in hand it's good for the bottom line. And as America's chief executive. I agree. So while congress decides what it's going to do. And I hope this year and I'm gonna work this year and urged this year that they actually pass a law. Today -- under what I can. To help raise working americans' -- So today. -- today I'm issuing an executive order requiring. Federal contractors. To pay their employees a fair wage of at least ten dollars and ten cents -- now. Okay. This will make a difference for fox. Right now there's dishwasher at Randolph airport base in Texas -- seven dollars and seven is seven dollars and 76. Cents an -- 776 now. There's a fast food worker there -- brought down the street meg an eight dollars and 91 cents now. But the water worker camp dodge and Iowa -- nine dollars and -- cents. Once I sign this order starting next year as their contracts come up each of them and many of their fellow coworkers are gonna get race. And by the way that includes folks who get paid in tips. -- get a -- to. -- -- -- -- -- Gone up even slower than the regular minimum wage. So just -- it's good for companies across the country this will be good for America's bottom line. For contractors for taxpayers. The opponents minimum wage have been using the same arguments for years and time and again they've been proven wrong. Raising the minimum wage is good for business and it's good for workers and it's good for the economy. -- more money in these -- pockets that means they got some might go shop. Which in turn means business -- more customers. And let's not forget. -- is good for the economy has the right thing to do. There's a simple. Moral principle at stake if you take responsibility and you work -- part of these folks work. You work all time. You should be living in poverty. Not a it's this. Executive -- will cover Americans with -- -- because. Help. I'm gonna keep doing whatever I -- to raise working americans' wages. And I would ask it any business leader out there any governor and mayor and -- local leader listening. Do what you get to raise your employees' wages. To work. -- Raised the wages of citizens and you're. Jurisdiction. -- support these efforts a majority of Americans not just Democrats. Not just independents but Republicans -- support raising the minimum wage. -- That's something congress should keep in mind this year. Of the bill right now in front of both the house and the senate that would boost America's minimum wage. To ten dollars and ten cents an hour this like I'm doing -- this segment. Do you remember. -- -- let's -- that don't raise the federal minimum wage to attempt. Wouldn't just. Raise wages for minimum wage workers it's a pact would lift wages for about eight. Million Americans it would lift millions of Americans out of poverty immediately. It would help millions more worked their way out of poverty. Requiring a single dollar in tax. The right thing to do. Just last month 600 economists including seven Nobel Prize winners. Wrote the leaders of houses of congress to remind them that the bill before congress would get. Little or no negative effect on. -- On jobs. -- -- -- -- -- -- The economy it'll stick -- Yes. More businesses more -- -- -- more money to spend. The economy forever about it so. Is excited about it. Remember the congress have a pretty clear choice to make right now. Workers' wages grow our com home. -- let wages stagnated further. Give workers what amounts to another pick up this year. Restore unemployment insurance for Americans don't want him for that job. Or expose them further the hardship. Members of congress you can help people make progress. In their own lives -- commitment of that progress. And every American deserves to know where your elected representative stands on this issue. So -- seven. -- represented the -- do you support raising the federal minimum wage to 1010 and now. If they say yes. -- Out and I don't hear that at all so. On the back -- glad to know whether that's the right thing to do. If they say no. People like. I don't yell at a budget but there -- -- not. Asked them to reconsider siding with. An overwhelming majority of Americans. Encourage them to say yes. America -- ariz. Some -- executive order when you hear me talking about mind. -- -- my phone to make a difference for middle class Americans most working to get in the middle class that's exactly what I mean. The -- do what I can't congress should do what it needs to do. I will not give up on this fight no matter how long it takes America deserves away. No more economic security and their own lives. But got a great new job -- the middle class bill. -- of opportunity for both. -- live in the middle class. Just like these folks who don't write it. Millions of Americans. Who could just use a little bit boost millions of Americans outside of Washington. We're tired of old stale political arguments -- tired of folks just looking out for people could afford big lobbyists and big campaign contributions. -- folks out there who want to see us restored economy that works for everybody. And and and get back to work founding vision of opportunity for -- -- -- -- -- -- -- -- -- But go out there and organized more thank you about it but. Now they don't play -- You know win. -- -- And there you have -- president -- on the signing an executive order that now requires. Federal contractors to pay their employees ten dollars and ten cents an hour for those who make a wage we still have with us. ABC news political director -- to talk about some of this the president stating his ultimate goal. Is for congress to raise the minimum wage nationwide this executive order in jest. Deals with federally -- attracted employees but this. Active executive order. Apple has -- angered fast. Just about done and to be frank about the politics of this it is not a popular right in the house Republicans is about no chance that they -- take it out there's been some talk about babies on the island in the wage but it's gonna take some prodding is gonna take some effort. And not to minimize the the import of this announcement today because it will have undeniable. Impact on some people going forward. I was struck by the -- the White House around atoms the president not by people who actually at a race today but by people who might get a raise if there is a future increases federal minimum wage. -- strong suspicion is that they weren't able to find enough people to fill that -- of people that are actually impacted by this action so. It is a lot of a lot of noise a lot of heat coming from Capitol Hill over this move. But it is very limited in scope and the president knows that the big enchilada is on the road that's getting a whole minimum wage raise a lot of companies are impacted by that a lot of the a lot of people are impacted by that. Of people that have part time work people of -- multiple jobs that's a big deal this is very much a small -- on that scale. The -- about another money matter which is the raising of the debt limit. We -- the Republican controlled house yesterday vote to do that certainly a house leader John Boehner is taking some heat but now we're hearing that it's. Still -- cloture second cloture in the senate has an update on that that can update that for us and tells what this means. Sure a little bit of drama going on on the senate floor right now this vote that would break the Republican led filibuster on the debt ceiling increase has been open for more than half an -- -- usually long period of time we don't have the actual vote because it isn't. And hasn't been recorded yet. Did the strong feeling right now is that there their short of the votes in that they're probably twisting some arms on the floor of the senate no one wants to see the debt ceiling go down in flames. But that's a real possibility unless they can convince at least five Republicans to two to support us and is of course a politically unpopular thing to do. -- -- thing here is that. -- and many Republicans and big opponents of the president -- opponents of raising the debt ceiling and said let's not subject this to a filibuster because. Here's the map there 55 Democrats in the senate. If you don't subject to a filibuster that only fifty or 51 of them have to approve it. For to go forward if you do subject to a filibuster they need a vote of sixty and that means trying to get some putting Republicans on the line for this so. Ted crew is led the charge in this one -- said look we're gonna use every procedural motion we can to try to hold this up we are gonna subject this to a sixty vote threshold. And that means a lot of awkward conversations right now on the floor of the senate. To make sure that the debt ceiling. Vote goes through if it doesn't go through. God in it they're not able to piece together at some point in the future that's when the market starts -- two to react in a pretty negative fashion I would imagine that the couple weeks before that happens. But this is one of those items that congress would like to wrap up. Before the impending snowstorm before the congressional recess next week they -- -- get this one tied up in a bowl and put the on the -- and the election this fall. They mention senator Ted Cruz we have ABC's -- sounding actually got to talk to him about raising the debt limit let's listen to that. I I think it's an irresponsible course of conduct to keep giving President Obama -- blank check when President Obama was elected. The national debt was ten trillion dollars -- it took 43 presidents over 200 years to build up ten trillion dollars in debt. In just five years that's gone from ten trillion dollars to seventeen trillion dollars and the president is saying he wants a blank check. With zero spending reforms nothing fixing the problem. I think that's irresponsible to our kids and grandkids to give them that and again. Cars that we -- -- senator Ted Cruz feels but as -- settle a lot of those in congress overall kind of wanted to get this wrapped up. We're house leader John Boehner stand -- and where does he stand if this fails to make it through the senate. John Boehner decided to put this authority voted for it and here's why what what senator Ted -- there is a fundamental. -- It is not true it's just not it's not accurately describing. What the debt ceiling -- as the debt ceiling just authorizes the issuance of new debt. To pay for spending that is already being -- by the federal government so it is not a blank check it is paying the bills that have already been racked up and that's the responsible course of action that's been taken by some Republicans yesterday -- some today as well. And this was never an issue for decades the debt ceiling was kind of a pro forma thing sometimes it was tied up in other pieces of legislation it was always uses a political statement. I've been senator Barack Obama famously voting against the debt ceiling increase because he thought it was it irresponsible action that vote used against them many times I think rightfully so he should. I'd be held to account for that but what senator -- saying is just not true this is not -- -- checked for the president. And that's the reason that Republicans now realize they don't have much leverage they don't want that the nation to default on is that -- Limbaugh hadn't -- bills that -- -- been incurred. And at least live on defied another political -- beyond this year's election. -- what position does that put Republicans in who really do just wanna see -- wrapped up and go way are we looking at a showdown between Republicans over the debt limit. Look this thinks for them and they're on the floor right now dealing with the fact that Ted Cruz has put them in this position if they crews had decided filibuster if he -- -- in -- and August and fifty votes would carry -- -- they would all presumably be democratic votes. Rightly or wrongly that's how business was done around the debt ceiling for decades in Washington. The talking points have always changed with political leadership the Democrats or control the Republicans -- the debt ceiling of Republicans who control the Democrats say the debt ceiling. That's the game. And the game -- changed they'll wonder the last couple years after the Tea Party take over -- 2010 given. Senator cruises take on this in the fact that he's put this and it -- tough spot -- -- change the way that it works and this is why senator -- one of the main reasons why senator Chris has a hard time making friends up there because he's putting a lot of his colleagues in a tough spot right now. All right ABC's. Political directorate finally thank you so much for joining us we've taken a couple of -- today. Thank -- including the president just having signed executive order which allows federally contracted employees. Raise up to ten dollars and ten cents hour -- we'd have to it has been an ABC news digital special report. -- Hernandez -- New York.

This transcript has been automatically generated and may not be 100% accurate.

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