The Economic Policy Institute has estimated that by 2006, there were roughly two million federal contract workers, representing 43 percent of all employees doing work for the government.7 In 2008, the Congressional Research Service noted that federal contracts and grants directly and indirectly generated more than 10 million jobs, a figure “more than twice as large as the combined total of all three branches of government, the U.S. Postal Service, the intelligence agencies, the armed forces, and the Ready Reserve.” 8 Others have calculated that nearly a quarter of
American workers are employed by firms that do at least some business with the federal government.
The Economic Policy Institute estimated that in 2006, 20 percent of federally contracted
workers fell below the poverty line and 40 percent earned less than a living wage.
"NELP. Taking the Low Road:How the Federal Government Promotes Poverty-Wage Jobs Through its Contracting Practices" 2013.
There are 560,000 workers that make $12/hr or less according to think tank Demos. The Demos number is an exaggeration because the minimum rate is being raise to 10.10/hr and is not going into effect immediately. A study by Ellison attempting to par down the Demos number due to the fact that the executive order would only slowly be going into effect over time to help workers, arrived at the number of 200,000 workers. EPI as referenced above is estimating 400,000 workers. Others have estimated 300,000.
Analysis by Traub at Demos, EPI and Ellison and many others at this point agree that the exact effect of the executive order is unknown, but agree that it will raise the minimum wage for hundreds of thousands of workers eventually. Since its an executive order, it could be repealed by a future president and would have a much smaller effect.
As explained by Traub:
The final details of the executive order document will be important, she adds, as it will likely detail exemptions and set out the schedule for implementation.
Exemptions may include workers also receiving disability or those in training, for example.
Federal contracts may run from a year to as long as ten years.
But since there are more than 2 million federal contractors, it does represent a somewhat small percent. The costs is borne by contractors, so it does not effect the budget.
EPI additionally estimates that raising the minimum wage for low wage workers will raise wages for other federal contract workers higher along the pay scale and affecting the pay scale for workers in the non federal private sector. It estimates over a million workers could be potentially effected by knock-on effects.
The increase goes into effect January 1, 2015 on new contracts. It will have no effect on current contracts.
This order shall not apply to contracts or contract-like instruments entered into pursuant to solicitations issued on or before the effective date for the relevant action taken pursuant to section 4 of this order.
On January 1, 2016 and thereafter, the Secretary of Labor will set the minimum rate, but it will not fall below $10.10/hr. It will increase with the inflation rate. See: Executive Order
The pundits are wrong that it will have no impact, because the low-paying jobs are heavily condescended in certain sectors. Seventy-five percent of janitors, food service, laundry, trucker drivers and military uniform factory workers make minimum wage. It could effect the companies when they try to bid for contracts next year.
