President Joe Biden plans to announce on Tuesday that he is raising the minimum wage for employees contracted to work for the federal government to $15 per hour starting next spring.
The increase will represent a 37 percent increase in pay overall from the current federal workers’ minimum wage, which presently sits at $10.95 per hour. The order will positively impact hundreds of thousands of workers that are employed as contractors through the federal government, according to White House officials.
The pay raise will not be implemented right away. Instead, workers will see their new wages take effect starting March 30, 2022, meaning current employees of the federal government won’t see raises for nearly a year.
But the raises do come with one new important feature that has been left out of previous executive orders on pay for federal contractors: It will tie future raises in the years ahead to increases in inflation.
Tipped workers who are employed as contractors with the federal government will also see their wages gradually raised to the $15 minimum wage as well but not until the year 2024. Until that time, they can be paid less, the executive order will stipulate, but only if their tips bring them up to the $15 per hour level.
“This is basically a more aggressive version of the minimum contractor wage [former President Barack] Obama implemented in 2014, but with a notable difference: Biden’s plan phases out the tipped minimum wage so that tipped workers will have to be paid the full minimum before gratuities,” HuffPost labor reporter Dave Jamieson explained in a tweet.
The order will also undo a previous decree by former President Donald Trump, who created exemptions to paying contractors the federal minimum wage by saying it did not apply to seasonal or recreational workers.
“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 who 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,” the Biden administration said in a fact sheet announcing Tuesday’s decision.
Addressing concerns from those who are likely to criticize the pay raise, the Biden administration explained that raising workers’ pay will come with a huge benefit to taxpayers. The administration argues that higher wages will “[enhanc[e] worker productivity,” a concept that many economists have long-held to be true. It will also “reduce turnover, allowing employers to retain top talent and lower the costs associated with recruitment and training,” the statement from the Biden White House said.
“At the same time, the executive order ensures that hundreds of thousands of workers no longer have to work full time and still live in poverty,” the statement added. “It will improve the economic security of families and make progress toward reversing decades of income inequality.”
While the move by Biden will likely improve the lives of hundreds of thousands of workers across the country, the president has so far been unsuccessful at his push to raise the wage for all workers in the U.S. to the $15 an hour rate, as he promised he would do during his campaign.
Biden had previously tried to include a $15 minimum wage for all workers in the COVID economic relief package that passed this year. But the Senate parliamentarian ruled that it couldn’t be included in the final bill, which was passed through reconciliation to avoid a filibuster by Republicans. Many progressives were disheartened when the Biden administration decided at the time not to use Vice President Kamala Harris’s authority as president of the Senate to bypass that ruling from the parliamentarian.