President Joe Biden issued a new executive order Tuesday to raise the minimum wage to $15 for federal contractors and expanded a previous Obama-era executive order to apply the minimum wage to tipped employees working on federal contracts.
In a fact sheet about the order, the White House said: “These workers are critical to the functioning of the federal government: from cleaning professionals and maintenance workers who ensure federal employees have safe and clean places to work, to nursing assistants who care for the nation’s veterans, to cafeteria and other food service workers who ensure military members have healthy and nutritious food to eat, to laborers who build and repair federal infrastructure.”
The executive order will reportedly increase the hourly minimum wage for federal contracts to $15 beginning January 30, 2022, to be incorporated in new contract solicitations. By March 30, 2022, every agency must implement the minimum wage requirement into new contracts. The minimum wage must also be adjusted to an inflation measure “so that every year after 2022 it will be automatically adjusted to reflect changes in the cost of living.”
Additionally, the order will get rid of the tipped minimum wage for federal contractors by 2024, which applies to the statute that permits employers to pay a “sub-minimum wage” as long as the tips bring the wage up to the level of the minimum wage. During the Obama Administration, an executive order was issued that raised the wages for tipped workers, but Biden’s new executive order on the topic will make sure that tipped employees who are working on federal contracts make the same minimum wage as other employees who are working on federal contracts.
The fact sheet also explained how the new order would “ensure equity,” noting that the order expands the required $15 minimum wage to federal contract workers with disabilities, similar to the Obama-era order.
The administration also discussed the executive order that was signed in 2018 by former President Donald Trump. The order created an exemption for applying the minimum wage to outfitters and guides who worked on federal lands. The order stated, “These individuals often conduct multiday recreational tours through Federal lands, and may be required to work substantial overtime hours. The implementation of [the Obama-era] Executive Order 13658 threatens to raise significantly the cost of guided hikes and tours on Federal lands, preventing many visitors from enjoying the great beauty of America’s outdoors.” The Trump administration order argued that the minimum wage implemented by former President Obama should apply to “lodging and food services associated with seasonal recreational services,” but applying that to outfitters and guides would “not promote economy and efficiency in making these services available to those who seek to enjoy our Federal lands.”
The Biden administration said that the executive order will be valuable to the taxpayer because it will improve worker productivity and create high-quality work “by boosting workers’ health, morale, and effort.” The minimum wage for federal contract workers is currently $10.95 per hour and tipped minimum wage is $7.65 per hour.
Conservatives have pushed back on raising the minimum wage to $15, citing it as a move that will ultimately harm workers and businesses.
In The Daily Wire’s Ben Shapiro’s “Debunked” piece on the $15 minimum wage, Shapiro discussed Thomas Sowell’s concept that the true minimum wage is zero, not what the government says the minimum wage is, due to the fact that artificially raising the minimum wage can put people out of work and minimize the jobs that are available.
Shapiro wrote, “The Congressional Budget Office recently evaluated Joe Biden’s plan for a $15 federal minimum wage, and what they found is that over the course of the next few years, it would improve the salaries for some 900,000 people, but it would put 1.4 million people out of work.”
Businesses that are harmed by a forced increase in the minimum wage are not large businesses, but rather the smaller ones that cannot afford to pay multiple workers a higher wage.
“There’s a reason that a poll in February 2020 — an economic boom time — found that 8% of small businesses said they would have to lay off workers if there was a massive increase in the minimum wage,” Shapiro wrote. “Fourteen percent said they would have to cut worker hours, and 22% said there would be a loss of profit margin, which in the end would lead to hourly cuts or to employees getting laid off.
Mandating a higher minimum wage also leads to automation as companies decide that it is in their best interest to hire a machine instead of a person.
Jobs that pay a minimum wage are also often the first job that a person takes when they are getting started in life. As Shapiro noted, “A quarter of minimum wage workers are under the age of 25. In fact, 8% of all teenagers are working for minimum wage.”
These jobs typically lead to other jobs and provide a pathway for people to improve their quality of life. Conservatives point to a forced minimum wage as a policy that will directly result in fewer beginner jobs for people, which ultimately harms businesses and their employees.
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