Photoshop :: Expand A Shape In Every Direction?

I'm creating a sign. I started from a font, then converted the text to a shape to provide the sign maker with vector art.
 
Some of the lettering is metal-like mounted on a dark acrylic backing that 's supposed to create a 3D stroke-like effect. In the original design I actually had a stroke on the lettering to mock up the effect. But now, in order to seperately cut the letters and the backing, the sign maker needs vector art for both the metal-like lettering AND the backing pieces, which extend another 1/8" beyond the metal-like in every direction.
 
I duplicated that shape to create the background. The background needs to be 1/8" bigger in EVERY direction, so that when the metal-like letter is mounted on top of it, the brown background will create a stroke effect:
  
I need to grow every border of this brown B by the same amount--the exterior as well as the 2 interior edges--so that when the yellow B (above) is placed on top of it, the brown shows a 1/8 "stroke" around the yellow B. I tried doing a straight transform, but that doesn't achieve the desired result. Another poster in the forum (answering a similar question) suggested using Modify > Expand, but I can't get that to work (the command is greyed out for some reason).