Federal contractors at the low end of the pay scale are about to get a raise, as President Joe Biden issued an executive order increasing the federal minimum wage to $15 an hour from its current level of $10.95.
The move will affect “hundreds of thousands” of people, including cleaners, maintenance workers, nursing assistants, cafeteria workers, and others who work at federal facilities, the White House said in a statement Tuesday. The Biden administration said the new minimum wage, which will automatically rise with inflation every year, would need to be incorporated into all new contract solicitations starting Jan. 30, 2022, and implemented by all agencies in new contracts by March 30.
In another major change, to take effect in 2024, there will be no distinction in the minimum wage for federal contractors who earn tips and those who don’t—both will make at least $15 an hour. Currently, workers who are eligible for tips earn a different minimum wage, $7.65 an hour.
Biden’s executive action is far more limited in scope than the proposal he campaigned on to raise the national minimum wage to $15. But efforts by progressive Democrats to include that proposal in the American Rescue Plan pandemic relief bill were stymied by opposition in the Senate.
The administration said the new order would ensure “hundreds of thousands of workers no longer have to work full time and still live in poverty,” while making federal operations more efficient by encouraging higher worker productivity and lower turnover and absenteeism.