Biden will sign an executive order on Tuesday increasing the minimum wage to $15 an hour for hundreds of thousands of people who are working on federal contracts.
However, the raise won’t kick in immediately. The executive order states that all federal agencies will need to implement the $15 minimum wage in new contracts by March 30, 2022. It’s difficult to amend existing contracts, but wages can be changed when they are up for annual review.
Currently, the minimum wage for federal contract workers is $10.95. It was raised to $10.10 under U.S. President Barack Obama in 2014 and later indexed to inflation.
Many federal contract workers make more than the current minimum wage. But the pay bump will give an extra boost to lower-wage workers like cleaning and maintenance professionals, food service employees on military bases and in government buildings, as well as nursing assistants who care for the nation’s veterans.
The White House could not provide an exact number of how many federal contract workers will ultimately see a raise because of the executive order, given the constantly-changing nature of federal contracts.
The Biden administration said a higher minimum wage will not cost taxpayers by making federal contracts more costly. Citing a study by Harvard University, a White House official said paying such a competitive wage ensures reduced turnover, absenteeism, training and supervisory costs as well as lower recruitment, all of which will increase productivity, cut costs and ultimately zero out any increased costs for taxpayers.
The official also said that Biden’s Council of Economic Advisors reviewed the order and did not conclude that requiring a higher wage would lead to any job loss.
ABC News’ Morgan Winsor contributed to this report.