Biden to set $15 minimum wage for federal contract workers

President Biden will sign an executive order on Tuesday to hike the minimum wage for federal contract workers to $15 an hour, according to senior administration officials with knowledge of the plans who briefed reporters on Monday. The move will see Biden deliver on a proposal he made right after taking office to give the contractors the pay hike within his first 100 days on the job. That time window closes on Friday.

The executive action will increase the pay of “hundreds of thousands” of federal contract workers, the White House said, without providing a more specific estimate.

“These workers are critical to the functioning of the federal government, from cleaning professionals and maintenance workers who ensure federal employees have safe and clean places to work, to nursing assistants to care for the nation’s veterans, to cafeteria and other food service workers who ensure military members have healthy and nutritious food to eat, to laborers who build and repair federal infrastructure,” a senior administration official said.

After 2022, the order will also index the $15 minimum wage for federal contractors to inflation, so it will be automatically adjusted to reflect changes in the cost of living going forward. The order will also eliminate the tipped minimum wage for federal contractors, which currently stands at $7.65, by 2024.

Some opponents to raising the minimum wage overall to $15 an hour argue that it will lead to job cuts. But the executive order was examined by the Council of Economic Advisors, and senior administration officials claim the move will “not lead to reduced employment,” but will “enhance worker productivity” and generate higher quality work by boosting heath and morale while reducing absenteeism and turnover.

A fact sheet provided by the White House, which will accompany the executive order, says all federal agencies will “need to incorporate a $15 minimum wage in new contract solicitations, and by March 30, 2022, all agencies will need to implement the minimum wage into new contracts.”

The president’s order will also compel federal agencies to implement the increased minimum wage into existing contracts when those come up for review for extensions, which often occur on an annual basis.

In January, two days after being sworn into office, Biden directed his team to start the work to allow him to issue an executive order within 100 days to require federal government contractors to pay workers the minimum $15 wage, as well as providing them with emergency paid leave.

While the order he’s signing on Tuesday won’t address emergency paid sick leave, senior administration officials said there would be more to say on that soon.