(Bloomberg) — President Barack Obama will raise the minimum wage to $10.10 an hour for federal contractors hired in the future, an initiative to be unveiled tonight in his State of the Union address.

Obama will issue an Executive Order covering contract workers — including janitors and construction workers — and repeat his call to reluctant lawmakers to increase the minimum hourly wage for all employed Americans.

“Nobody who works full-time and works hard at their job should live in poverty; we think $10.10 an hour will allow them to do that,” Denis McDonough, chief of staff to the president, said on the “CBS This Morning” program.

The president is fulfilling a pledge made at a Jan. 14 Cabinet meeting to make 2014 “a year of action” by using his executive power. “We are not just going to be waiting” for legislation, adding that “I’ve got a pen and I’ve got a phone,” and pledged to use both to press his case with Congress.

Obama’s use of executive power is probably the most dramatic since the Bush administration and Vice President Richard Cheney’s assertion of powers for national security reasons, says Ross Baker, a political scientist at Rutgers University in New Brunswick, New Jersey.

“This is a warning shot, an indication the president intends to use these powers to the maximum,” Baker says. It may signal a larger battle with Congress over use of executive power. “That’s the heart of it,” Baker says.

‘Hundred thousand’

The wage increase will take effect when new contracts are signed and won’t cover existing employees until their contracts are renewed, according to a White House statement. Valerie Jarrett, senior adviser to Obama, said on Bloomberg Television Tuesday the order covers “a couple hundred thousand” workers.

Demos, a New York-based public policy group that says it advocates for economic inequality, praised Obama for helping thousands of Americans reach the middle class.

“While it’s unfortunate that the order does not apply to existing workers until their contracts are renegotiated, the president’s action adds momentum to the fight for a federal minimum wage increase that would benefit all Americans,” said Demos President-select Heather McGhee in an e-mailed statement.

Demos in May released a study that found almost 2 million workers on federal contracts, grants, loans, concession agreements and leases are paid less than $12 an hour.

Private sector

Jobs With Justice, a Washington-based group that advocates for worker rights, called Obama’s move a first step towards a higher minimum wage that applies to private-sector employers.

“Millions of federal contract workers, as well as advocates for working families, are thrilled with the news that President Obama will use his presidential authority to raise the minimum wage,” Executive Director Sarita Gupta said in an e-mail. “’Now it’s time for Congress to take action and raise the minimum wage for all Americans.”

Lawmakers ignored Obama’s plea in last year’s address to raise the minimum wage and congressional elections in November won’t make reaching an agreement any easier.

“It would be challenging to move the needle on inequality in the near term even with Congress’s cooperation,” said Jared Bernstein, Vice President Joe Biden’s former chief economist. “It would be really hard to do it without.”

Dish washers

The president is using leverage he has on the issue to increase wages for those employed through federal contractors and including U.S. military base employees, such as dish washers, food service personnel and laundry workers. The White House, in a statement, said the president will keep pressing Congress to raise the national minimum wage from the current $7.25 an hour.

Obama also could use regulatory authority to raise the salary threshold for exemption to the overtime rules in the Fair Labor Standards Act, effectively meaning many more workers would have to receive pay at time and a half for working more than 40 hours per week, Bernstein said.

Obama wants Congress to pass a bill by Senator Tom Harkin and U.S. Representative George Miller, both Democrats, to raise the federal minimum wage in stages to $10.10 an hour, and then index it to inflation.

Miller, ranking Democrat on the House Education and Workforce Committee, in a statement today applauded the order.

The White House argued in a fact sheet that Congress hasn’t increased the minimum wage in seven years, and that a full-time minimum wage worker earns about $14,500 a year, meaning a family of four “has to raise their children in poverty.”

Critics argue raising the minimum wage will squeeze businesses, adding to their costs and perhaps leading to reductions in employment. The administration has argued that countless studies debunk that argument, and that a higher wage stabilizes the workforce.

Jarrett said Obama hasn’t given up on working with congressional Republicans, and the president is always seeking ideas for improving legislation. “He doesn’t want to just hear what they’re against, he wants to hear what they’re for,” she said.

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