Biden Signs Executive Order Requiring Federal Contractors to Pay a $15 Minimum Wage

President Biden signed an executive order on Tuesday directing federal contractors to pay a $15 minimum wage for their workers starting next year. 

Shortly after coming into office, Biden directed his administration to work on this executive order, which was part a slew of actions aimed at empowering the federal workforce and providing Americans with economic relief. He said he hoped this would happen within his first 100 days, which ends on Friday, April 30. 

“This executive order will promote economy and efficiency in federal contracting, providing value for taxpayers by enhancing worker productivity and generating higher-quality work by boosting workers’ health, morale and effort,” said a fact-sheet from the White House. There are “hundreds of thousands of workers who are working on federal contracts,” who “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 executive order says that starting on January 30, 2022, all agencies have to incorporate the new minimum wage into their contract solicitations. By March 30, 2022, they have to implement the $15 minimum wage into new contracts. “Agencies must also implement the higher wage into existing contracts when the parties exercise their option to extend such contracts, which often occurs annually,” said the fact-sheet. Every year after 2022, agencies must index the minimum wage in order to adjust for inflation. 

Other provisions of the executive order include: eliminating the tipped minimum wage for contractors by 2024, ensuring that federal contract workers with disabilities receive the $15 minimum wage and restoring the minimum wage protections for outfitters and guides on federal lands (by revoking a May 2018 executive order from President Trump).

Biden’s new executive order builds on one from President Obama in February 2014, which required federal contractors to pay their workers $10.10 per hour. Currently, the minimum wage for workers on federal contracts is $10.95 per hour and the tipped minimum wage is $7.65 per hour. 

The order “will help improve the economic security of their families and narrow racial and gender disparities in income,” said the White House. Also, “competitors in the same labor markets as federal contractors may increase wages, too, as they seek to compete for workers...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 Labor Department’s Wage and Hour Division and Federal Acquisition Regulatory Council will start the rulemaking process to implement and enforce the order. 

Part of Biden’s directive in January was to also provide emergency paid leave to workers on federal contracts. That is not mentioned in the fact-sheet for the executive order the president signed on Tuesday.

This story has been updated to reflect that Biden signed the order.