Biden Executive Order Raises Minimum Wage to $15 for Federal Contractor Employees

President Joe Biden making his first nationally televised address.

There has been a lot of debate, in Congress and in watercooler conversations in businesses around the country, about raising the federal minimum wage to $15 an hour.

On Tuesday, President Joe Biden did just that for employees of federal contractors.

Biden signed an executive order requiring federal contractors to pay a $15 minimum wage to hundreds of thousands of their employees. According to a fact sheet released by the White House, the order will:

  • 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 phaseout 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.”

“These workers are critical to the functioning of federal government, from cleaning professionals and maintenance workers, to nursing assistants who care for the nation’s veterans, to cafeteria and other food service workers who ensure we all have healthy and nutritious food to eat, to laborers who build and repair federal infrastructure,” White House Press Secretary Jen Psaki said in her press briefing Tuesday.

According to The White House, starting Jan. 30, 2022, all government 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.

Additionally, government agencies will need to implement the higher wage into existing contracts when contracts are extended each year. 

“Employers may seek to raise wages for workers earning above $15 as they try to recruit and retain talent,” White House officials said in a press release. “And, research shows that when the minimum wage is increased, the workers who benefit spend more, a dynamic that can help boost local economies.”
NBC News reported that The Economic Policy institute estimates as many as 390,000 low-wage federal contractors will see a raise under the policy and that the average annual pay increase for affected year-round workers would be approximately $3,100.

The minimum wage for workers performing work on covered federal contracts is currently $10.95 per hour and the tipped minimum wage is $7.65 per hour.

Saru Jayaraman, president and co-founder of One Fair Wage, a national nonprofit advocating on behalf of tipped workers earning subminimum wage, called the executive order “a win for workers, a win for our economy and a win for our country.”

“On the campaign trail, President Biden promoted to lift up and empower workers, and fight for a $15 minimum wage – and today he delivered the first step for the millions of workers who helped put him into office expecting him to deliver on that promise,” Jayaraman said in a statement. “By also phasing out the subminimum wage for tipped federal contractors and ensuring that federally contracted workers with disabilities are paid equitably, President Biden is making sure that the federal government does not perpetuate the discriminatory wages that are most often paid to women, people of color, and people with disabilities. 

“Change is possible,” Jayaraman added. “We urge Congress to follow President Biden’s courageous leadership and make sure all workers – not just federally contracted workers, and – are given the same opportunity to thrive by passing the Raise the Wage Act and ending racist, sexist, and ableist subminimum wages in the United States.”

Will Biden’s executive order push the conversation on a $15-per-hour federal minimum wage. Bernie Sanders, the independent U.S. Senator from Vermont, apparently thinks it should.

“Congress should follow [Biden’s] lead and end starvation wages for the rest of the nation,” Sanders tweeted.