Department of Labor raises federal contract workers’ minimum wage to $15 an hour

WASHINGTON - The U.S. Department of Labor announced that the guaranteed minimum wage for federal contractors will be increased to $15 per hour beginning Jan. 30, 2022. 

The pay increase will impact new contracts with government agencies and was part of an executive order signed by President Joe Biden to lift the hourly rate for federal contractors from $10.95 in April. 

Unfortunately for some workers, the increased wage is required only in new contracts, so some working under existing federal contracts will have to wait. 

The wage would be indexed to inflation, so it would automatically increase with each year to reflect changes in prices. The tipped minimum wage of $7.65 an hour for federal contractors would be replaced by the standard minimum by 2024.

"These workers 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 White House said in a statement earlier this year. 

The announcement follows a similar move by former President Barack Obama in 2014, which raised the minimum wage for federal contractors to $10.10 per hour.

Biden has pushed to establish a $15 hourly minimum wage nationwide for all workers, making it a part of his COVID-19 relief package. But the Senate parliamentarian said the wage hike did not follow the budgetary rules that allowed the $1.9 trillion plan to pass with a simple majority, so it was not included in the bill that became law in March.

Currently, millions of Americans are still earning less than $15 an hour. The nonpartisan Congressional Budget Office calculates that even by 2025, roughly 17 million workers will remain below that level.

As employers hard hit by the COVID-19 pandemic struggle to fill job roles, $15 an hour has increasingly become a reality especially in America’s service industry.

Businesses, particularly in the restaurant, retail and travel industries, have been offering a $15 wage to try to fill enough jobs to meet surging demand from consumers, millions of whom are now spending freely after a year in lockdown. And many of the unemployed, buoyed by stimulus checks and expanded jobless aid, feel able to hold out for higher pay.‘

The change since the pandemic has been swift. For years, and notably in the 2020 presidential race, labor advocates had trumpeted $15 an hour as a wage that would finally allow low-paid workers to afford basic necessities and narrow inequality. It struck many as a long-term goal.

Now, many staffing companies say $15 an hour is the level that many businesses must pay to fill their jobs.

"That number is not a coincidence," said Aaron Sojourner, an economist at the University of Minnesota. "It’s the number that those activists and workers put on the table 10 years ago, and built a movement towards."

This story was reported from Los Angeles. The Associated Press and Kelly Hayes contributed.