President Joe Biden is moving to increase the hourly wages of hundreds of thousands of federal employees after his push for a $15 federal minimum wage failed.
Today, Biden is expected to sign an executive order requiring employers to pay a $15 minimum wage to employees covered by federal contracts. The current minimum wage for federal contract employees is $10.95 per hour.
Beginning Jan. 30, 2022, all federal agencies will be expected to include a $15 minimum wage in new contract solicitations. By March 30, all federal contracts must have a $15 minimum wage.
The higher wage, according to a senior administration official who described Biden’s plan to reporters on Monday, would benefit workers who are considered critical to federal government functions, such as cleaning and maintenance workers, nursing assistants who care for the nation’s veterans, cafeteria and food service workers who serve military members meals, and laborers who build and repair federal infrastructure.
The official couldn’t tell how many employees would profit from the raise but guessed it would be in the hundreds of thousands.
According to the official, increasing the minimum wage will not increase taxpayer costs because the higher wage will increase efficiency and reduce other costs such as supervisory and training expenses.
When employees exercise their ability to extend current contracts, which happens often every year, federal agencies would be expected to integrate the $15 minimum wage into those agreements. After 2022, the minimum wage will be gradually adjusted to represent increases in the cost of living by being indexed to inflation.
The order also abolishes the tipped contract workers’ separate pay scheme. Tipped workers employed under a federal contract are now guaranteed a minimum cash wage of $7.65 per hour. Employers must make up the difference if a worker’s tips along with the mandatory cash wage are less than $10.95 per hour, the current minimum wage for federal contractors.
By 2024, Biden’s order will abolish the tipped minimum wage for federal contractors. Workers on government contracts that are tipped would be paid the same minimum wage as all federal contract employees.
Since 2007, Congress has not increased the federal minimum wage – now $7.25 per hour – despite polling showing that the majority of Americans support a rise.
Biden promised to advocate for a $15 minimum wage during his presidential campaign last year, but he has encountered resistance from congressional Republicans and some moderate Democrats, who argue that forcing businesses to pay higher salaries would result in job losses.
Biden intended to include the increase in a $1.9 trillion COVID relief bill, which would be his first significant piece of legislation as president. However, the amendment was removed from the package after a Senate parliamentarian determined that it did not meet the special budget rules used by the Senate to enact the bill.
Biden has stated that he is willing to pursue a $15 minimum wage as a separate bill. However, having a separate bill passed would be much more difficult because overcoming a filibuster would require 60 votes in the Senate, which would be almost impossible to do considering the Senate’s 50-50 partisan split.
Biden laid the groundwork for raising the federal contractor minimum wage to $15 on his second day in office.
On Jan. 22, he signed an executive order ordering his administration to begin the work necessary to issue an order in his first 100 days requiring federal contractors to pay their employees a $15 minimum wage and provide them with emergency paid leave. Agencies were tasked with reviewing which federal employees earn less than $15 an hour and developing recommendations for boosting their pay.
Biden’s order excludes emergency paid leave. According to a senior administration official, the administration may announce the subject soon.
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