Employees of federal contractors will make at least $15 per hour under a final rule that the Labor Department announced Monday, providing a likely wage increase for more than 300,000 workers, according to Biden administration estimates.
The wage floor will affect contracts that are executed or extended beginning Jan. 30, 2022. The current minimum wage for contractors is $10.95 under a rule enacted by the Obama administration in 2014 and is scheduled to rise to $11.25 on Jan. 1. Both rules require that the minimum wage increase over time to account for inflation.
Paul Light, an expert on the federal workforce at New York University, has estimated that 5 million people work for employers that have federal contracts, including security guards, food workers, janitors and call-center workers, but most already make more than $15 per hour. The rule will also apply to construction contracts entered into by the federal government.
Labor Secretary Marty Walsh said in a statement that the rule “improves the economic security of these workers and their families, many of whom are women and people of color.”
President Joe Biden announced the rule in April when he signed an executive order directing the department to issue it. Biden’s announcement came amid a series of pro-labor moves by the administration, which included reversing Trump-era rules softening worker protections and enacting legislation that allocated tens of billions of dollars to strengthen union pension funds.
Administration officials said they did not expect the minimum wage increase to result in significant job losses or cost increases, contending that the higher wage would improve productivity and reduce turnover, providing employers and the government with greater value.
The federal minimum wage remains $7.25 per hour, though many cities and states have laws setting their wage floors substantially higher. The House of Representatives has passed a bill to raise the federal minimum to $15 per hour by 2025, but the legislation has not advanced in the Senate.