Trump Assault on Federal Contractor Wages Could Mean 25% Pay Cuts for Hundreds of Thousands
"A higher federal contractor wage standard is good for employers and the federal government overall," said one left-leaning think tank.
After U.S. President Donald Trump last month undid a Biden-era regulation that required businesses that contract with the federal government to pay their workers a $17.75 an hour minimum wage, the Center for American Progress released an analysis Friday which found that some workers impacted by the change could see a 25% pay cut.
Thanks to rollback from Trump, "corporations working on government contracts are free to cut wages for hundreds of thousands of workers," according to the author of the analysis, who also said that the move constitutes a new front in the Trump administration's "war on workers."
Former President Joe Biden's order, which was announced in 2021 and went into effect in 2022, initially raised the minimum wage to $15 an hour with automatic updates, which bumped it the minimum up to $17.75 in January 2025.
The rescission was part of an executive order that reversed 18 "harmful executive orders and actions" issued by Biden.
According to CAP, a liberal think tank, Trump's scrapping of the Biden minimum wage protection leaves in place an Obama-era rule, meaning some workers on federal contracts can now be paid a minimum of $13.30 an hour.
The analysis arrived at the 25% pay cut by calculating the difference between the $17.75 floor and $13.30. However, CAP noted that the U.S. Department of Labor still has to issue guidance over how it will enforce this older wage standard.
Other wage protections for workers on federal contracts exist, but CAP argues that "they are inadequate for protecting the workers who just saw their minimum wage taken away."
The Davis-Bacon Act establishes minimum prevailing wage standards for workers on federal construction sites, for example, but the wages established under the law can be much lower than $17.75 an hour, according to the analysis.
"The boost for workers from the Biden minimum wage increase that the Trump administration just nullified was substantial," according to CAP, which cites a Department of Labor estimate from 2021 that the change would impact 327,300 employees in the first year of implementation.
In 2021, the left-leaning think tank the Economic Policy Institute estimated that, taking into account the hundreds of thousands of workers who could see their wages raised through Biden's executive order, the total pay increases thanks to the rule would amount to $1.2 billion in 2022.
"A higher minimum wage for federal contractors helps ensure that taxpayer dollars incentivize good jobs, rather than low-wage jobs where contractors compete with each other in a race to the bottom," according to a statement from EPI following Trump's rescission of the minimum wage rule. "A higher federal contractor wage standard is good for employers and the federal government overall."
