Federal Employees News Digest

Fed contractors to get wage increase

The White House, in a new Executive Order, acted this week to ensure that federal contractors pay workers a minimum wage of $15 per hour.

The move comes on the heels of a similar EO, issued January 22, aimed at federal employees, exclusively—mandating agencies begin a process resulting in the same wage floor.

Prior to this week’s order, the federal contractor minimum wage remained pegged at a much lower rate: $10.95 per hour.

“This order promotes economy and efficiency in Federal procurement by increasing the hourly minimum wage paid by the parties that contract with the Federal Government to $15.00 for those workers working on or in connection with a Federal Government contract as described in section 8 of this order,” the EO states.

The order goes on to list the advantages—to feds, agency mission efficiency, and to the wider society: “Raising the minimum wage enhances worker productivity and generates higher-quality work by boosting workers’ health, morale, and effort; reducing absenteeism and turnover; and lowering supervisory and training costs.”

The new order is to take effect immediately, with the raised minimum wage to be included in new contracts by Jan. 30, 2022—and for this minimum amount to be adjusted annually by the Secretary of Labor in keeping with the Consumer Price Index for Urban Wage Earners and Clerical Workers. This should protect fed contractors against any severe loss of purchasing power due to inflation.

Also under the EO, tipped federal contractors next year will see a significant if not equal boost in their minimum wage, to $10.50 per hour, up from the current $7.65. By 2024, tipped workers’ minimum wage must be adjusted to match that of all other federal contractors.

The Biden White House is on the record as favoring a $15 per hour minimum wage across the economy, in the private sector and all other employers. The president has clarified in public statements that he would be willing to see that number achieved, as seen to some degree in the EOs applying to federal and federal contractor pay, by way of incremental increases. In a current White House-backed bill in Congress, Senate Bill 15, the national minimum wage would have to reach $15 by 2025.


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