President Joe Biden will issue an executive order on Tuesday raising the minimum wage paid by federal contractors to $15 an hour, according to a White House statement.
The new minimum raises an hourly wage minimum of $10.95 set under an order by former President Barack Obama signed in 2014. Biden’s order which will also require that the new minmum wage rise with inflation, is expected to take effect next year, the White House said in a statement Tuesday.
The executive order “ensures that hundreds of thousands of workers no longer have to work full time and still live in poverty. It will improve the economic security of families and make progress toward reversing decades of income inequality,” the White House said.
Tuesday’s measure follows an executive order Biden signed shortly after taking office aimed at protecting the federal workforce that called for recommendations to promote a $15/hour minimum wage for federal employees.
The White House has argued that the increase will not lead to significant job losses and that it was unlikely to cost taxpayers more money. It has also said that the higher wage would lead to greater productivity and lower turnover.
The development is the latest step in efforts by the Biden administration to tackle labor issues after earlier steps to reverse Trump-era rules that weakened worker protections.
During his campaign, Biden painted himself as an ally to strengthening unions and early on in his administration, sought to increase minimum wage nationally to $15 an hour in a measure he had included in his $1.9 trillion coronavirus relief bill that the Senate parliamentarian ultimately ruled could not be included arguing that it did not meet a strict set of guidelines needed to move forward in the budget reconciliation process.
Biden’s executive order will begin a rule-making process that is expected to conclude by March 2022. The wage hike will be incorporated into new contracts and existing contracts as they are extended and direct agencies to identify federal workers who are earning less than that minimum.
Biden’s executive order will also eliminate “tipped minimum wage” for federal contractors by 2024. Employers are currently permitted to pay workers receiving tips $7.65 an hour as long as their tips put them over the regular minimum wage. Under the new minimum, all workers must be paid at least $15 an hour.