On Tuesday, the Biden-Harris administration issued an executive order requiring federal contractors to pay their workers at least a $15 minimum wage, a move that will impact hundreds of thousands of workers. The order builds on Obama's executive order from Feb. 2014, which raised the minimum wage of federal contractors to $10.10 per hour, with a tipped wage of $7.65 per hour, subsequently indexed to inflation.
Biden's order also stipulates indexing of the minimum wage to an inflation measure, which means contractors will have to compensate their lowest-paid workers even more in the future. Biden's order also will eliminate the "tipped" minimum wage for federal contractors by 2024.
According to the order, federal agencies must include a $15 minimum wage in all-new contract solicitations beginning Jan. 20, 2022. By Mar. 30 of next year, all agencies will need to implement the minimum wage into new contracts. Additionally, it must be offered to existing contractors when the parties exercise their option to continue such contracts, which frequently occurs annually.
Officials estimate the wage increase will apply to hundreds of thousands of workers, including nursing assistants who care for veterans, cleaning professionals, maintenance workers, cafeteria workers, and other food service workers at military installations. The increase will also impact laborers who repair the nation's infrastructure, a number that would increase dramatically with the passage of Biden's proposed $2.25 trillion infrastructure plan.
The order abolishes former President Donald Trump's executive order, which gave guides and outfitters working on federal grounds increased flexibility in what they paid their craftsmen. Those companies will be obligated to pay their workers at least $15 an hour. The rationale behind the order cites references from the United Kingdom, Harvard University, Columbia University, UCLA, University of North Carolina, among others. According to the Biden-Harris administration:
"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. It will reduce turnover, allowing employers to retain top talent and lower the costs associated with recruitment and training. It will reduce absenteeism, a change that has been linked to higher productivity, not just by the employees who are more present, but by their co-workers, too."
The White House provided the following detailed explanation of the Order:
Increase the hourly minimum wage for federal contractors to $15. Starting January 30, 2022, all 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. Agencies must also implement the higher wage into existing contracts when the parties exercise their option to extend such contracts, which often occurs annually.
Continue to index the minimum wage to an inflation measure so that every year after 2022, it will be automatically adjusted to reflect changes in the cost of living.
Eliminate the tipped minimum wage for federal contractors by 2024. Federal statute allows employers of tipped workers to pay a sub-minimum wage as long as their tips bring their wage up to the level of the minimum wage. The Obama-Biden executive order raised the wages for tipped workers but didn’t completely phase out the subminimum wage for these workers. This executive order finishes that work and ensures tipped employees working on federal contracts will earn the same minimum wage as other employees on federal contracts.
Ensure a $15 minimum wage for federal contract workers with disabilities. To ensure equity, similar to the Obama-Biden minimum wage executive order for federal contractors, this executive order extends the required $15 minimum wage to federal contract workers with disabilities.
Restore minimum wage protections to outfitters and guides operating on federal lands by revoking President Trump’s executive order 13838 “Exemption From Executive Order 13658 for Recreational Services on Federal Lands.”
House Committee on Oversight and Reform Ranking Member James Comer (R-KY) and Subcommittee on Government Operations Ranking Member Jody Hice (R-GA) blasted Mr. Biden for signing the executive order. Comer said in a statement:
"President Biden is unilaterally writing another progressive policy from the Oval Office and circumventing the legislative process. Raising the minimum wage for federal contractors doesn't make them work faster or more efficiently. This isn't rewarding performance. This is just going to come from the pockets of taxpayers and worsen the ever-growing pile of debt."