Biden hikes minimum federal wage by 37%

Photo: EPA Joe Biden

US President Joe Biden is set to raise minimum payment to federal contractors by nearly 37 percent to $15 an hour from current $10.95, AP reported. The White House said the raise would lead to higher productivity on the back of higher motivation and thus would offset higher cost for taxpayers. The new minimum wage is also a part of stimulus package targeted at the consequences of the pandemic related slowdown.

“This executive order will promote economy and efficiency in federal contracting, providing value for taxpayers by enhancing worker productivity and generating higher-quality work by boosting workers’ health, morale, and effort,” the White House said in a statement.

The officials could not provide an exact figure on how many workers for federal contractors would receive a raise, only that it would be hundreds of thousands. There are an estimated 5 million contract workers in the federal government.

The increase could be dramatic for workers who earn the current minimum of $10.95 an hour. Those workers would receive a 37% pay hike, though the increase would be rolled out gradually, according to the terms of the order. The White House said the workers would include cleaning professionals and maintenance workers, nursing assistants who care for veterans, cafeteria workers providing for the military and laborers who build and repair federal infrastructure.

All federal agencies would need to include the higher wage in new contract offerings by 30 January next year. By 30 March, agencies would need to implement the higher wage into new contracts. The increase would also be in existing contracts that are extended.

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.

Biden has pushed to establish a $15 hourly minimum wage nationwide for all workers, making it a part of his coronavirus 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.

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