President Biden signed an executive order on Tuesday requiring federal contractors to pay a $15 minimum wage — a move that will affect hundreds of thousands of workers, the White House said.
“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 White House said in a statement earlier Tuesday.
All government agencies will have to incorporate the $15 wage in new contract solicitations beginning on Jan. 30, 2022, and implement the minimum wage into new contracts by March 30, 2022, the White House said.
The government agencies will also have to include the higher wage into existing contracts that are extended each year.
“Employers may seek to raise wages for workers earning above $15 as they try to recruit and retain talent,” the White House said. “And research shows that when the minimum wage is increased, the workers who benefit spend more, a dynamic that can help boost local economies.”
The current minimum wage for workers in federal contracts is $10.95 an hour.
Biden’s executive order will also link the minimum wage to inflation beginning in 2022 to reflect the cost of living and will eliminate the tipped minimum wage of $7.65 an hour by 2024.
The Economic Policy Institute said it estimates that 390,000 low-wage federal workers will see a raise under Biden’s executive order.
Biden wanted to increase the federal minimum wage nationally to $15 an hour from $7.25 in his COVID-19 relief bill, but the Senate voted it down.
It has remained the same since 2009.
The White House said hiking the federal minimum wage will enhance productivity, generate higher-quality work, boost workers’ morale, reduce turnover and help in retaining top talent.
It said a recent study on warehouse workers and customer service representatives at an online retailer found that a $1 increase in hourly wages brings a return of $1.50 in increased productivity and reduced costs.
“As a result of raising the minimum wage, the federal government’s work will be done better and faster,” the White House said.