President Biden will sign an executive order Tuesday raising the minimum wage to $15 an hour for all federal contractors by 2022. In addition, the order will remove a lower minimum wage for tipped contractors.
$15 Minimum Wage
According to The White House, all government agencies will need to incorporate a $15 minimum wage in new contract solicitations starting Jan. 30, 2022. In addition, contractors will need to implement the $15 minimum wage into contracts by March 30. Plus, government agencies will need to implement higher wages in existing contracts during annual renewals.
The planned increase pushes the federal contractor minimum wage from the current $10.95. Meanwhile, federal workers who receive tips will also require the new minimum. The order will phase out tipped federal worker pay by 2024.
Minimum Wage Increase Affects Hundreds of Thousands of Federal Contract Workers
Meanwhile, senior administration officials said they estimate that hundreds of thousands of workers who do contract work for the federal government will benefit from the increase.
This includes cleaning staff, maintenance workers, veteran facilities assistants, cafeteria and food workers, and laborers. Estimates on the number of federal contractors are around 4 million people.
In addition, the officials said they don’t believe the minimum wage adjustment will cost jobs. They cited an analysis by the president’s Council of Economic Advisers, which believes this increases worker productivity. Also, the increase lowers other costs involved in supervising and training workers.
Latest Progressive Policy
The $15 minimum wage the Biden administration’s latest attempt to advance policies they say will address economic inequality and strengthen the middle class.
When Biden won the election, progressives and worker advocates intensified their push on the government to increase compensation for minimum-wage workers. In fact, Biden proposed raising the federal minimum wage for all workers immediately after assuming his presidency. However, any proposals to adjust the federal minimum wage require an act of Congress.
Realizing the split Senate may not have enough support, Democrats inserted the measure into the reconciliation stimulus bill. Consequently, the Senate parliamentarian ruled out the wage increase doesn’t have a direct bearing on the stimulus bill.
$15 Minimum Wage For All Workers
Even as Biden will raise federal workers’ minimum pay, Democrats are still working to upgrade the federal rate for all workers. Currently, the federal minimum wage stands at $7.25 an hour.
It has yet to receive an increase for over ten years. The Biden administration can only mandate federal worker wages. Meanwhile, the Labor Department will enforce the standards. For private companies, the federal minimum or the state minimum wage rates still apply.
Larry Cohen is the chair of Our Revolution, a Bernie Sanders-aligned political group, who advocates for progressive agendas. “While it’s a huge step for the federal government to show an example, we need to actually deliver results.
This would be a big result for federal contractors, but there are many millions more that are obviously not covered, and we shouldn’t give up on them either, and we should use the budget process because otherwise there’s no chance of raising the minimum wage in the Senate,” he said.
Still Below Living Wages
A full-time salary at $15 an hour totals around $31,200 a year. Progressive advocates find the amount below acceptable living wages in many urban areas of the country. Consequently, as federal wages index themselves to inflation, they will automatically rise along with cost-of-living increases.
Watch the CNBC news video reporting that President Joe Biden to raise the minimum wage to $15 per hour for federal contractors:
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