Biden to order raising federal contractor minimum wage to $15

President Biden on Tuesday is expected to sign an executive order raising the minimum wage for federal contractors to $15 by March 2022.

At that time, the order will result in a 37-percent raise for federal contractors making the current contracting minimum $10.95, and setting their salary at over double the regular statutory federal minimum wage, which has been stuck at $7.25 since 2009.

The move would affect hundreds of thousands of workers, according to a senior administration official.

Biden pledged to look into raising the minimum wage for contractors upon taking office. Since then, a bid to pass legislation increasing the general minimum wage to $15 by 2025 failed, putting into doubt Biden’s ability to make good on the campaign promise.

Republicans and some centrist Democrats have balked at the $15 figure, saying a minimum wage of $10-$12 would be more appropriate in some parts of the country. Boosting minimum wages too high too quickly, they argue, would strain companies’ finances, leading them to cut back on hiring.

Unlike the broader minimum wage, however, the wage for contractors is funded by the federal government, meaning the costs would theoretically be passed on to the taxpayer or add to the deficit.

But the Biden administration is arguing that higher wages will lead to less turnover, increased productivity and fewer training costs, creating enough savings to neutralize the costs.

Biden’s order would also phase out the tipped minimum wage, which stands at $7.25 by 2024, and set minimum wages for workers with disabilities on par with the standard minimum wage for contractors.

Federal agencies will have to begin incorporating the new wages into their contract solicitations by Jan. 30, 2022, for implementation no later than March 30.

The new wages will apply to existing and multiyear contractors when their contracts receive their annual renewals, meaning some workers won’t see the benefits until later in the year.