Biden Uses Executive Authority to Raise Minimum Wage to $15 for Government Contractors

President Biden campaigned on a proposal to raise the minimum wage to $15.00 by 2026. He first tried to carry out this campaign promise as part of the $1.9 trillion stimulus bill, but the Senate parliamentarian ruled that raising the federal minimum wage does not meet requirements to pass the bill by a majority vote (without the opportunity for a filibuster) through budget reconciliation. There were later attempts by liberal Democrats to circulate a plan to punish corporations with a tax penalty if employees were not paid at least a certain amount. 

On April 27, 2021, President Biden signed an executive order requiring that federal contractors pay a $15 minimum wage. Starting January 30, 2022, agencies will be required to include a $15 minimum wage in new contract solicitations. By March 30, 2022, agencies must implement it into new contracts. The agencies will also incorporate it into existing contracts when they are extended. The current minimum wage for work on covered federal contracts is $10.95. In addition, the bill eliminates over three years the lower minimum wage of $7.65 for federal contractor employees on tips. By 2024, workers regularly earning gratuities will be subject to the same $15 pay as other contractor employees. It will also require government contractors paying workers with disabilities to pay at least $15 per hour. 

Such changes come with a great deal of controversy. The non-partisan Congressional Budget Office on February 8, 2021 reported that, while lifting as many as 900,000 Americans above the poverty level, the $15 minimum wage would cost 1.4 million Americans their jobs. Further, many believe that local and regional minimum wages are more appropriate than a nationwide one, given disparities in job markets and cost of living, as evidenced by the variations in state minimum wage laws. A Rasmussen Poll indicates that only 31% of Americans support a $15 minimum wage, although 80% of Americans believe the minimum wage should be raised. The nationwide minimum wage has not been raised in over a decade, and 29 states now have minimum wages higher than the federal level. 

This is part of our June 2021 Newsletter.

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