President Joe Biden on Tuesday plans to sign an executive order raising the minimum wage for workers under federal contracts to $15 an hour by next March, a move that will significantly increase the pay of hundreds of thousands of low-wage employees.
Under the new order, federal contractors will be required by March 30, 2022 to pay their workers at least $15 an hour, up from current wage floor of $10.95. Additionally, Biden plans to phase out the $7.65 tipped minimum wage for federal contract workers by 2024.
According to fact sheet released by the White House, the president's order will also "continue to index the minimum wage to an inflation measure so that every year after 2022 it will be automatically adjusted to reflect changes in the cost of living."
"The executive order ensures that hundreds of thousands of workers no longer have to work full time and still live in poverty," the White House said. "It will improve the economic security of families and make progress toward reversing decades of income inequality."
Saru Jayaraman, president and co-founder of One Fair Wage, said in a statement that Biden's order "is a win for workers, a win for our economy, and a win for our country."
"By also phasing out the subminimum wage for tipped federal contractors and ensuring that federally contracted workers with disabilities are paid equitably," Jayaraman added, "President Biden is making sure that the federal government does not perpetuate the discriminatory wages that are most often paid to women, people of color, and people with disabilities."
For months, progressive lawmakers and economists have been pressuring Biden to use his executive authority to quickly raise the pay of federal contract employees, who often perform low-wage work ranging from cleaning government buildings to operating concessions at national parks.
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"We need to raise the minimum wage to $15—and the Biden-Harris administration can do that on Day One for all federal contractors," Sen. Elizabeth Warren (D-Mass.) tweeted in December.
Writing for The American Prospect last year, Heidi Shierholz of the Economic Policy Institute (EPI) noted that the impact of raising the minimum wage for federal contract workers would be "substantial." EPI has estimated that hiking the wage floor to $15 for federal contractors would result in direct raises for at least 240,000 employees.
"The current federal contracting system leaves many of these contract workers facing low wages and poor working conditions," Shierholz wrote. "The contracting system prioritizes low prices for contracts for routine services in which labor costs make up the majority of the cost of the contract. This provides an incentive for contractors to cut corners with respect to worker pay and workplace safety."
Biden's executive order comes as progressives in Congress are attempting to chart a path forward for legislation to raise the federal minimum wage to $15 an hour, something the president does not have the authority to do unilaterally.
"We need to pass a $15 minimum wage," Rep. Pramila Jayapal (D-Wash.), chair of the Congressional Progressive Caucus, tweeted last week. "Not $10. Not $11."
This article has been updated to include comment from One Fair Wage.