Obama Set To Raise Minimum Wage For Federal Contract Workers - ABC FOX MONTANA NEWS, WEATHER, SPORTS - KTMF/KWYB

Obama Set To Raise Minimum Wage For Federal Contract Workers

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In the State of the Union speech on Tuesday evening President Obama made a big push to raise the minimum wage for federal contract workers by almost three-dollars.

President Obama said he will sign an executive order that would raise the minimum wage for federally contracted employees from $7.25 per hour to $10.10 per hour.

White House Officials said this will affect about 200,000 low-wage workers including food service workers in federal buildings, security guards and construction workers. 

Although this will only affect federal contract workers, Montana State University Economic Professor, Carly Urban said it could eventually affect local workers.

"It may also increase the local labor market wages," said Urban. "If construction workers on a federal project are getting paid more than construction workers in the local market, then they might also get a higher wage."

In the past, the President has addressed raising the national federal minimum wage, but Congress has not agreed.

Urban said the idea of raising the minimum wage raises a lot of concerns.

"If we increase minimum wage then this is going to decrease employment, so less people are going to be employed," said Urban. "This could then cause unemployment rates among unskilled workers to be higher."

Steve Adams is the owner of Taco Time in Bozeman. His new hires start at minimum wage.

He said the minimum wage increase over the past couple years has been hard for his business.

"The increase in minimum wage leaves me very little room to reward long-term employees," said Adams. "It also makes it more difficult for me to justify hiring 14 to 15 year old people."

He hopes the minimum wage stays where it is for a while.

"I fear that it will be a trickle down effect just like most other things," said Adams.

The federal contract workers will not see the wage increase until 2015.

The minimum wage in Montana rose to $7.90 on January 1, which is almost two-dollars higher than the federal minimum wage.

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