The Equity Factor

Three Ways the State of the Union Could Affect Cities

A rundown of points in President Obama’s speech that could benefit cities and city-dwellers.

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Historically, the State of the Union means nothing. It gives the president a chance to talk for an hour about issues and policies that will, most likely, never make their way through the bipartisan meat grinder that is Congress. Last night President Obama did, however, say a few things that could measurably benefit cities and the people who live in them. He even issued a few executive orders. Here are the three most important points of Obama’s speech for cities:

Raising Minimum Wage for Federal Contract Workers

Last week, federal contract workers walked off the job to protest paltry wages. Obama announced last night that he’ll issue an executive order to raise the minimum wage for workers on new contracts to $10.10 an hour. (Existing contracts, though, will be honored at their suboptimal wages.) Three out of four contract workers make less than $10 an hour, according to a survey from the National Employment Center Law Project. Congressional Republicans may criticize the president’s use of executive authority, but barring a court ruling the wage hike will most likely go into effect.

Strengthening the Earned Income Tax Credit

This one flew under the radar. The EITC is a refundable tax credit for low-income workers, but recipients are largely parents. It doesn’t do much for the working poor who don’t have kids at home. Obama wants to change that. A report from the Center on Budget and Policy Priorities found that by making the EITC more widely available — that is, to more childless working Americans — it would help buoy those low- to moderate-income workers. As the chart to the right shows, childless workers at the poverty line ($11,905 annually) are taxed $1,826, yet only receive $186 in EITC. “Childless workers are the lone group that the federal tax system taxes into, or deeper into, poverty,” the report found. Even worse, a full-time minimum wage worker ($14,000 annually) is taxed $2,699 and receives zero EITC. Any work Congress can do to make the EITC more robust and available would go a long way.

Recognizing the Power In American Cities

“To every mayor, governor and state legislator in America, I say, you don’t have to wait for Congress to act; Americans will support you if you take this on,” Obama said in a nod to the power vested in local leaders. From San Francisco to SeaTac, Wash., local lawmakers have taken the initiative to increase their city’s minimum wage. On a broader scale — it’s not just minimum wage — cities are often ground zero for reform. From housing policy (region-specific policies could help prevent future bubbles) to local procurement (local hiring clauses on big infrastructure projects can boost job numbers), these lawmakers can influence not only the direction of their own city, but of cities around the country. It’s notable that the president would acknowledge this, and it must have the folks at the Brookings Institution jumping for joy.

The Equity Factor is made possible with the support of the Surdna Foundation.

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Bill Bradley is a writer and reporter living in Brooklyn. His work has appeared in Deadspin, GQ, and Vanity Fair, among others.

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Tags: jobswashington dcincome inequalityequity factortaxesbarack obamaminimum wage

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