By Mar-Vic Cagurangan
The standard minimum wage for federal contractors has been raised from $10.95 to $15 per hour effective Jan. 30, according to the U.S. Department of Labor's new rule, which also extends to the government of Guam's service contracts.
According to Guam's procurement law, contractors doing business with the government of Guam are required to adopt the latest minimum wage rate set by the federal labor agency.
Public Law 25-111:2 states that " in such cases where the contractor employs a person(s) whose purpose, in whole or in part, is the direct delivery of service contracted by the government of Guam, then the contractor shall pay such employee(s) in accordance with the wage determination for Guam and the Northern Mariana Islands issued and promulgated by the U.S. Department of Labor."
The law provides that if a contract is subject to renewal, then wage adjustments reflecting the federal labor rate must be stipulated in the new contract.
The minimum wage hike for federal contractors' employees, which was announced last week by the USDOL, was mandated by President Biden’s executive order signed on April 27, 2021.
It applies to new contracts, new solicitations and renewals of existing contracts across the United States including the territories— Guam, CNMI, American Samoa, Puerto Rico, Wake Island and Johnston Island.
“All of the workers who benefit from our minimum wage final rule will get an average raise of $5,228per year,” Jessica Looman, acting administrator of the U.S. Department of Labor’s wage and hour division, said in a statement posted on the agency’s website.
“This raise, affecting more than 300,000 workers, comes at a time of historic federal investment in our nation's infrastructure that will create millions of new jobs in construction and related industries,” Looman said.
“As a public servant, I see every day how the work of federal contract workers helps keep the government running and ensures that the American public gets essential services and necessary resources,” Looman said.
While the new wage rate applies to construction workers, Looman said, it will extend to child care, health care, and building and other service workers employed on federal contracts.
“About 54 percent of the workers impacted by this minimum wage increase are women, and about 25 percent are workers of color,” Looman said. “Raising the minimum wage improves the economic security of families, reduces poverty and makes progress toward reversing decades of income inequality.”
"Added benefits can also include better government services, higher morale and productivity, and lower turnover and absenteeism,” Looman said.
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The wage rate will be adjusted each year, according to the department’s final rule. Beginning Jan. 1, 2023, the secretary of labor will determine the minimum wage on an annual basis based on the consumer price index at least 90 days before any new minimum wage is to take effect.
Citing a 2019 study by the Congressional Budget Office, the labor department estimates that a $15 per hour minimum wage could raise earnings for 27 million workers, 17 million of whom would have their rate increased to the new minimum wage and 10 million of whom may receive spillover effects.
"Increasing the wage less, such as $12 an hour or $10 an hour over the same time frame has commensurately smaller impacts on earnings," the department said.
The labor department said expects the quality of government services to improve when the minimum wage of federal contract workers is raised.
"In some cases, higher-paying contractors may be able to attract higher quality workers who are able to provide higher quality services, thereby improving the experience of citizens who engage with these government contractors," the department's rule said.