The Trump administration has opened the door for possible pay reductions of up to 25% for hundreds of thousands of private sector workers by rescinding a Biden-era executive order that assured a higher minimum wage for those on government contracts.
Although the administration’s handling of federal employees has received much focus, this action marks a major escalation aimed at private sector workers under government contracts. These employees are now susceptible to lower pay at a time when growing living expenses and inflation are already stressing family finances.
President Donald Trump signed an executive order on March 14 reversing a 2021 Biden administration rule that government contractors pay employees at least $17.75 per hour. Many of whom lacked college degrees and were once making under $15 per hour, that rule had raised pay for more than 327,000 workers. Under the Biden policy, the average increase was $5,228 yearly per employee.
Enforcement of the Biden-era pay rule by the U.S. Department of Labour has stopped under the new directive. Under an older Obama-era guideline, contractors are now allowed to pay as low as $13.30 per hour, so reversing progress and cutting salaries by as much as 25%.
Federal contracts back a wide spectrum of activities—everything from culinary services and building upkeep to manufacturing and supplying military personnel uniforms. Using its buying power, the U.S. government has maintained fair labour standards for more than a century. Ensuring that contracted workers made more than twice the stagnating federal minimum pay of $7.25 per hour, the Biden administration carried on this legacy by changing the contractor wage level yearly to fit inflation.
For low-paid workers who had only lately begun to experience large salary rises, the reversal of this policy represents a major blow. This shift puts hundreds of thousands at risk of lower income, which will make it more difficult to get by in an already difficult economic situation.
