Biden Administration Say Brnovich has No Right to Second Guess, or Sue, Over Federal Wage Hike
By Howard Fischer Capitol Media Services
PHOENIX -- The Biden administration says state Attorney General Mark Brnovich has no right to second guess -- and sue -- over the president's decision to set a $15 minimum wage for employees of federal contractors.
In filings in federal court here, Justin Sandberg, an assistant U.S. attorney, told Judge John Tuchi that Congress gave the president "broad powers'' to decide the policies for providing goods and services to the federal government. And that, he said, includes the terms in which it will do business, including how much those contractors must pay their workers.
More to the point, Sandberg said Arizona has no specific interest in the policy that would allow it and a handful of other states to challenge Biden's decision. He said claims that it would somehow affect state revenues are entirely "speculative.''
"And speculative harm does not suffice'' to sue in federal court,'' Sandberg told the judge.
He also suggested that if Brnovich thought the president was acting illegally he should have acted long before this, pointing out that similar rules existed under both the Obama and Trump administrations.
Federal law going back to 1949 allows the president to establish policies for the executive branch he considers necessary to foster and "economical and efficient system'' to obtain goods and services.
Using that, Biden issued an executive order last year requiring federal agencies to put a requirement in all contracts that workers are paid at least $15 an hour.
All that, Brnovich said in filing suit, is beyond the president's authority. And he noted that Congress actually rejected an administration proposal in a Covid relief package to increase the federal minimum wage for all workers, now $7.25 an hour, to $15.
What Biden has done, Brnovich charged, is do an end-run, complete with a definition of who is a federal contractor that would sweep in more than 500,000 businesses that employ one fifth of the entire U.S. labor force.
"But the United States is not a dictatorship,'' the attorney general charged. "Notwithstanding the president's conviction that he -- and not Congress -- knows what the appropriate minimum wage should be, he can only act consistent with the law as set out by Congress.''
Sandberg, in the response, said that is what Biden is doing.
He pointed out that the order says that raising the minimum wage "enhances worker productivity and generates higher-quality work by boosting workers' health, morale and effort; reducing absenteeism and turnover; and lowering supervisory and training costs.''
"In short, the rule is aimed directly at improving economy and efficiency in government contracting by improving the efficiency of contractors' employees and thus of the federal government's contracting operations,'' Sandberg said.
And he said there's evidence to back that up.
Sandberg cited a 2003 student which found that increased wages paid to workers at San Francisco International Airport "increased productivity and shortened airport lines.'' And a 2011 study of both full- and limited-service restaurants found "productivity increased due to improved worker morale after a wage increase.''
Brnovich, however, wants the court to focus on what he said are direct impacts on the state.
For example, he said all three state universities have federal contracts, with federal revenues in the 2021 fiscal year topping $1.2 billion. Having to comply with Biden's order, Brnovich said, will affect those schools who he said have some workers who earn less than the $15 figure, forcing them to either raise those wages or forego the federal contracts.
He also said there are many private employers who have federal contracts.
Aside from interfering with what Brnovich said is the sovereign power of states, he argued that affected companies will face higher labor costs.
"Those businesses in turn will have lower taxable income, and hence pay less in taxes to the state treasure,'' he said. And if companies are forced to lay off workers to keep labor costs down, that will result in more people applying for jobless benefits.
Sandberg said nothing interferes with state sovereign powers, even in cases where state agencies are federal contractors.
"It can choose to enter into a contract with the federal government on terms that are mutually agreeable or, if no such terms exists, it can choose to forgo a contact,'' he said. "Requiring the state to make a choice -- even a hard choice -- does not infringe on a state's sovereign authority.''
Sandberg said that Arizona and the other states that joined the lawsuit are free to disagree with the president's conclusions about higher wages resulting in higher productivity.
"But they fall short of establishing that President Biden exceeded his statutory authority in drawing those conclusions,'' he said.
And Sandberg told Tuchi that it's irrelevant that Congress refused to raise the federal minimum wage. He said it's legally unrelated to the president's authority to issue executive orders.
"The Supreme Court has repeatedly said that congressional inaction cannot amend a duly enacted statute,'' Sandberg said, in this case the 1949 law.
A hearing on the state's bid to enjoin the wage requirement is set for July 12.
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