Federal contractor minimum wage in 2021: what is Biden’s plan for it?

On Friday President Joe Biden signed two executive orders designed at providing financial support for those who are most at-risk as the country struggles to deal with the economic consequences of the pandemic.

Included in the orders was a measure which will pave the way for the minimum wage for federal employees and associated contractors to be raised to $15-per-hour, more than doubling the current rate. Upon signing the executive orders Biden said that the move was part of an “all-of-government” solution to “the growing hunger crisis”.

“We cannot, will not, let people go hungry,” Biden told reporters gathered at the White House. “We cannot let people be evicted because of nothing they did themselves. We cannot watch people lose their jobs. We have to act.”

What is Biden going to do to the federal minimum wage?

Currently the federal minimum wage is just $7.25, although many states have passed their own minimum wage laws that are considerably higher. But in states like Georgia and Wyoming employers are not obliged to pay any more than the nationally-mandated $7.25-per-hour, leaving many struggling to cover essentials like food and rent.

The federal minimum wage has not been altered since 2009, in the first year of the Obama administration and also in response to an economic crisis. Biden has committed to a more bipartisan style of governance than his predecessor but used his executive authority to introduce this wage increase for federal employees.

The executive order Biden signed on Friday only applies to federal workers, i.e. employees of the federal government. It does however also initiate a process that would see all federal contractors receive the $15-per-hour minimum wage, and beefs up workers’ bargaining power and provision for emergency paid leave.

Biden’s plan also overturns three executive orders signed by President Trump in 2018 that were seen as eroding the rights of federal workers. Trump’s legislation reduced job protections for employees of the federal government and hit labour unions, limiting the efficacy of group action.

Will Biden raise the minimum wage nationally too?

Although Friday’s announcement referred only to one section of the workforce previous comments from Biden make clear that he is looking to roll out the increase nationally. The executive orders were designed to make a quick improvement but Biden’s $1.9 trillion pandemic relief plan would see the $15-per-hour minimum wage introduced for all workers.

“No one working 40 hours a week should live below the poverty line,” said Biden, speaking after announcing the American Rescue Plan. “If you work for less than $15 an hour and work 40 hours a week, you’re living in poverty.”

An increase to the national minimum wage has been discussed for years but has only recently grown to real prominence in the United States. That is borne out in the growing number of states who have introduced their own increases to the minimum wage.

In recent months the state of Florida, which actually returned a vote for Donald Trump in the 2020 presidential election, has approved a ballot measure that would see the minimum hourly wage increased to at least $15 by 2026. Currently around 40% of the US workforces lives in an area where there are plans to increase the minimum wage to $15 or more.

Biden’s plan to increase the national minimum wage to $15-per-hour would also be done on a staggered timescale to allow businesses to adapt to the new cost of labour. With calls for a $15 minimum wage growing across the country the President is confident that his proposal could be introduced nationwide.

“People tell me that’s going to be hard to pass,” Biden told reporters recently. “Florida just passed it. The rest of the country is ready to move as well.”