Biden to order $15-an-hour minimum wage for federal contract workers

By: - April 27, 2021 10:04 am

WASHINGTON, DC – MARCH 11: U.S. President Joe Biden arrives to give a primetime address to the nation from the East Room of the White House March 11, 2021 in Washington, DC. President Biden gave the address to mark the one-year anniversary of the shutdown due to the COVID-19 pandemic. (Photo by Alex Wong/Getty Images)

WASHINGTON — President Joe Biden plans to sign an executive order Tuesday to raise the minimum wage for federal contract workers to $15 an hour, according to senior administration officials.

The order will go into effect Jan. 30 of next year, according to a fact sheet provided by the administration. Once in place through new and extended contracts, the wage will automatically adjust to changes in the cost of living every year after 2022.

Workers under federal contract include nursing assistants at Veterans Administration hospitals, maintenance workers, cleaning staff and food service workers “who ensure military members have healthy and nutritious food to eat,” a senior administration official said on a call with reporters Monday night.

A 40-hour work week with a minimum wage of $15 an hour comes out to an annual salary of about $31,000.

Biden’s order builds on an executive order signed by President Barack Obama in 2014 that required federal contractors to pay federal contract employees $10.10 per hour.

Biden’s order also eliminates the tipped minimum wage for federal contractors, which is $7.65 per hour, by 2024.

The order also guarantees a $15 minimum wage for federal contract workers with disabilities, as a loophole in the Fair Labor Standards Act  allows an employer to pay an individual with a disability less than the minimum wage.

Senior administration officials did not say how many federal contractor workers would benefit from the wage increase, but estimated it would apply to “hundreds of thousands” of them. They said that the wage hike would not lead to job losses.

“This was examined by the Council of Economic Advisors, and it was found that it would not lead to reduced unemployment,” a senior administration official said, adding that the raise “would enhance worker productivity and create higher quality work by boosting workers’ health, morale and effort.”

An official also said the order would reduce turnover, allowing employers to retain top talent, and lower costs associated with recruitment and training.

Democrats earlier this year unsuccessfully tried to make the case for including a gradual federal minimum wage increase in the $1.9 trillion relief package proposed by the Biden administration and passed by Congress. The nonpartisan Congressional Budget Office released a report that found an increase in the federal minimum wage to $15 by 2025 for all workers would reduce poverty and increase pay for millions of low-income people, though the CBO also projected job losses.

About 6 in 10 U.S. adults support a raise in the federal minimum wage to $15 an hour from the current $7.25, according to a Pew Research Center survey conducted from April 5-11.

In Pennsylvania, Gov. Tom Wolf, a Democrat, and his allies in the General Assembly continue to push a proposal to raise the wage to $15 an hour by 2025. It has met stubborn resistance in the Republican-controlled General Assembly.

Legislative alternatives, however, are making the rounds. Sen. Dan Laughlin, R-Erie, is sponsoring legislation that would boost the wage to $10 an hour. In the House, Rep. Kevin Boyle, D-Philadelphia, has offered a bill that would allow municipalities to set their own minimum wages.

Capital-Star Editor John L. Micek contributed to this story. 

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Ariana Figueroa
Ariana Figueroa

Ariana covers the nation's capital for States Newsroom. Her areas of coverage include politics and policy, lobbying, elections and campaign finance.