Overview of Regulatory Changes

In a significant move just last month, former President Donald Trump rescinded a regulation that established a minimum wage requirement of $17.75 per hour for federal contractors, a regulation put in place by the Biden administration. This modification has raised concerns about potential wage reductions for a sizable segment of workers involved in government contracting.

Potential Wage Reductions

According to an analysis released last Friday by the Center for American Progress (CAP), the rollback may result in affected workers seeing their wages slashed by as much as 25%. The analysis highlighted that this shift is part of a broader trend perceived as a “war on workers” during the Trump administration.

The Biden-era order, which began implementation in early 2022, initially set the minimum wage for federal contractors at $15 per hour with projected increases leading to $17.75 by January 2025. With Trump’s reversal, they default back to an Obama-era minimum wage standard of $13.30 per hour.

Analysis of the Impact

The reduction from $17.75 to $13.30 represents a significant decrease in wages. CAP arrived at the 25% calculation by comparing these two figures. However, the U.S. Department of Labor has yet to outline how it will enforce the older wage standard now reinstated.

While there are existing wage protections under various regulations, CAP argues these measures are inadequate to safeguard the interests of those workers whose minimum wage protections were recently revoked.

Existing Wage Protections

The Davis-Bacon Act does establish wage minimums for federal construction workers, yet these wages can fall short of the $17.75 standard previously in place under Biden’s executive order. CAP emphasizes that the loss of the previous wage increase is substantial for many workers who rely on these contracts for their livelihood.

Broader Economic Implications

Estimates indicate that Biden’s minimum wage increase would have positively affected approximately 327,300 workers in its first year alone, with projected overall pay raises exceeding $1.2 billion in 2022, according to an earlier report from the Economic Policy Institute (EPI).

EPI stated, “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.” This underscores the economic rationale behind the push for higher wage standards for those working on federal contracts.