Obama to lift minimum wage for federal contractors

WASHINGTON (REUTERS) - President Barack Obama will announce on Tuesday that he is issuing an executive order to raise the minimum wage to US$10.10 (S$12.90) an hour for federal contract workers with new contracts, the White House said.

In his State of the Union address, Mr Obama will also call on Congress to pass a bill that would increase the federal minimum wage for all workers to US$10.10 an hour from US$7.25 and index that to inflation going forward.

The executive order for new contracts or existing contracts in which terms are being changed would take effect at the beginning of next year. Issuing the order allows Mr Obama to bypass Congress in a limited way, with Republicans opposed to a broad increase in the minimum wage.

Janitors and construction workers would be among the beneficiaries of the order, the White House said.

"A higher minimum wage for federal contract workers will provide good value for the federal government and hence good value for the taxpayer," the White House said in a statement.

"Boosting wages will lower turnover and increase morale, and will lead to higher productivity overall. Raising wages for those at the bottom will improve the quality and efficiency of services provided to the government."

Reducing inequalities between the rich and the poor and helping boost the middle class are expected to be key themes of Mr Obama's address on Tuesday night.