The U.S. Department of Labor has finalized a rule to raise the minimum wage for federal contract workers to $15 an hour, implementing an executive order by President Joe Biden that will impact hundreds of thousands of workers.
The increase in Minimum Wage for Federal Contractors applies to federal contracts entered into on or after Jan. 30, 2022, or the existing contracts.
“Today’s final regulation is the next step toward ensuring that we have… economic security for the federal contract workers who provide for our child care, health car, ,maintain our buildings and provide federal contact services all over the country,” Wage and Hour Division Acting Administrator Jessica Looman told reporters Monday.
Under the rule, which Looman said will affect 327,000 workers, the minimum wage will be indexed to inflation every two years.
The rule also ends the tipped minimum wage for federal contact workers by 2024, which means employers won’t be able to take a tip credit against the minimum wage and so those workers will at least make $15 an hour plus tips.
If not for the new rule, federal contractors would have had a minimum wage of only $11.25 in 2022 under an existing Obama-era executive order.
"Raising the minimum wage will make sure that work performed for the federal government by contractors will be done better and faster," DOL Secretary Marty Walsh told reporters Monday. "This executive order doesn't just benefit federal government contractors; it benefits the whole economy."
The rule implements an executive order Biden signed in April that called for the higher minimum wage. The DOL unveiled the proposed rule in July and later accepted public comments on the proposal, including from industry groups that said the proposed rule could cause confusion and kill jobs.
The proposed rule "would leave the business, in allocating that limited money to pay for labor, with little choice but to pay more money to fewer workers," David Addington, executive vice president and general counsel for the National Federation of Independent Businesses, said in a public comment.
Worker advocates applauded the proposal. In public comments, more than a half-dozen groups and think tanks said in versions of a coordinated statement that the proposal would take "steps to raise pay for the low-wage contract workers and help to lay the groundwork for future action to improve job quality for millions more workers whose jobs are funded through federal spending."
The final rule contains "no significant changes" from the proposed version, Looman told reporters Monday.