April 28, 2021
The Budgetary Consequences of a $15 Minimum Wage for Federal Contractors
President Biden recently issued an executive order raising the federal minimum wage for federal contractors to $15. This executive order marks the second time in 10 years that federal government has pursued such policy. In a new analysis, AAF’s Director of Fiscal Policy Gordon Gray outlines the executive order and notes that it could cost taxpayers up to $1.2 billion annually.
The new administration has fully embraced the notion that federal spending is largely free of tradeoffs or cost considerations: to wit, the recently announced increase in the minimum wage paid to federal contractors. The administration argues that having federal contractors pay more for labor costs than they otherwise would is somehow a bargain for the taxpayers. But published estimates suggest the entirely sensical observation that increasing costs to the government does in fact increase costs to the taxpayer.