U.S. President Joe Biden at a virtual summit on climate with 40 world leaders in the East Room of the White House on April 22, 2021.
President Joe Biden issued an executive order Tuesday (April 27) requiring federal sector contractors to pay workers at least $15 per hour.
The White House said that on Jan. 20, 2022, federal agencies must mark the minimum wage at $15 per hour in all new hiring contracts. By March 30 of next year, all agencies will be required to implement the minimum wage in new contracts and for workers on existing contracts, and each party will have the option to extend such contracts. Such contracts would typically be signed annually.
The decree will also provide for linking the minimum wage to inflation targets. This means that contractors will have to provide more compensation to workers receiving the minimum wage in future years.
Another presidential order rescinds an executive order by former President Donald Trump (R-Texas) that allowed travel agents and tour guides operating on federal lands greater flexibility in paying their workers. Under Biden’s order, these companies would also be forced to pay their employees at least $15 per hour.
The White House claims the order “will promote the effectiveness and efficiency of federal contracting, provide value to taxpayers through increased worker productivity, and produce higher quality work through improved worker health, morale and effort.
It also claims that the order will reduce employee turnover, absenteeism and administrative costs.
In a statement, the White House said, “The federal government will get its work done better and faster thanks to a higher minimum wage.”
When Biden was vice president, President Obama issued an order requiring federal contractors to pay workers $10.10 an hour, with wages indexed to inflation. The current rate is $10.95 per hour.
According to the Biden administration, the order will affect thousands of federal contract workers. New York University professor Paul Light estimates that about 5 million workers are under contract with the federal government.
Earlier this year, Biden and congressional Democrats, tried to raise the minimum wage for all U.S. workers to $15 an hour, but were blocked by top Senate rules experts.
White House press secretary Jen Psaki told reporters that after getting over that hurdle, Biden would still be committed to raising the wage.
He thinks it’s long overdue,” she said on Feb. 28. He believes that men and women who work hard and try to make ends meet shouldn’t have to live on the poverty line. We’re going to spend the next few days and weeks looking for the best way forward and hopefully working with Democrats and Republicans to do that.”
The current federal minimum wage is $7.25 per hour, and about two states have a somewhat higher minimum wage.
But critics argue that raising the minimum wage to $15 an hour would lead to fewer jobs and a depressed economy.
House Republicans said in February: “We all want to see wages rise, but this report makes it clear that government intervention will actually bring more evils than benefits. That’s because it will cause low- and middle-income Americans to lose the income stream they need altogether.” He was referring to a Congressional Budget Office (CBO) report on raising the minimum wage.