President Biden will sign an executive order Tuesday requiring federal contractors to pay a $15 minimum wage to hundreds of thousands of workers, senior administration officials said.
Under the order, people working on federal contracts will receive the pay increase starting on Jan. 30, 2022. The current minimum wage for contractors is $10.95 per hour, last raised in 2014.
“The executive order ensures that hundreds of thousands of workers no longer have to work full time and still live in poverty,” a senior administration official said. “It will improve the economic security of families and make progress toward reversing decades of income inequality.”
Officials couldn’t specify the number of workers who will be affected. But they said it will apply to hundreds of thousands of people from cleaning professionals and maintenance workers, to nursing assistants who care for the nation’s veterans, to cafeteria and other food service workers at military installations, to laborers who repair federal infrastructure.
The move does not affect the nationwide federal minimum wage, currently $7.25 per hour, for workers at private companies, or those who receive higher state minimum wages. The White House and Democrats were thwarted in an effort to boost the national minimum wage to $15 per hour in February due to Senate budget rules.
Mr. Biden’s order also will eliminate the “tipped” minimum wage for federal contractors by 2024.
Federal law allows employers of tipped workers to pay a sub-minimum wage, as long as tips bring their wages up to the level of the current minimum wage. The increase will continue to be indexed annually for inflation.
An administration official said the president’s move won’t have a “significantly negative effect” on employment. Officials also asserted that it won’t cost taxpayers, saying that federal contractors will save money through greater productivity of their workers and other efficiencies associated with the wage increase.
“There would be no increased cost conveyed to the taxpayer,” an official said. “This executive order will promote economy and efficiency in federal contracting, providing value for taxpayers by enhancing worker productivity and generating higher-quality work by boosting workers’ health, morale, and effort.”
The Department of Labor will start the process by issuing a rule requiring the contractors to pay the higher wage.
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