US Federal Contract Laborers' Minimum Wage Raised To $15 Per Hour

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President Joe Biden issued an executive order raising the minimum wage for federal contract workers in the United States to $15 per hour.

Hundreds of thousands of workers who are working on federal contracts will benefit from this order. They include cleaning professionals, maintenance workers, nursing assistants, cafeteria and other food service workers, and laborers who build and repair federal infrastructure.

As per the order, the hourly minimum wage for federal contractors will increase from the current rate of $10.95 to $15 in new and renewed contracts and contract options starting in January next year.

From January 30, 2022, all agencies will need to incorporate a $15 minimum wage in new contract solicitations, and by March 30, 2022, all agencies will need to implement the minimum wage into new contracts. Agencies must also implement the higher wage into existing contracts when the parties exercise their option to extend such contracts, which often occurs annually.

The minimum wage will continue to be indexed to inflation so that every year after 2022 it will be automatically adjusted to reflect changes in the cost of living.

The executive order envisages eliminating the tipped minimum wage for federal contractors by 2024.Federal statute allows employers of tipped workers to pay a sub-minimum wage as long as their tips bring their wage up to the level of the minimum wage. This executive order ends that system and ensures tipped employees working on federal contracts will earn the same minimum wage as other employees on federal contracts.

The new minimum wage is also applicable to federal contract workers with disabilities.

Minimum wage protections to outfitters and guides operating on federal lands, which was revoked by President Donald Trump, will be restored.

A higher minimum wage, and the elimination of the tipped minimum wage, will benefit many women and people of color who likely have children and are the breadwinners in their households, the White House said in a press release.

A recent study focusing on warehouse workers and customer service representatives at an online retailer found that raising hourly wages by $1 yields a return of approximately $1.50 through increased productivity and reduced costs, it added.

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