What the new Minimum Wage Executive Order means
In late April, President Biden signed an executive order, requiring government contractors to increase the minimum wage to $15 per hour by 2022. Censeo Consulting Group analyzed the effect of the federal worker minimum wage increase. They determined that approximately 30,520 contracts will require modification. In addition, they expect the modifications to add 450,000 additional contracting office, workload hours. This equates to about 240 additional full-time positions. (ExecutiveGov May 27, 2021)
The executive order will impact federal spending from between $1 and $2 billion. Agencies can prepare by:
- Segmenting contract portfolio by delivery location and spend category, highlighting impacted contracts
- Developing a policy and process for addressing impacted contracts
- Analyze internal pricing to identify contracts requiring modifications (ibid)
The departments of Veterans Affairs, Defense, Agriculture, and State are most impacted by the executive order and are likely preparing to make their contract modifications on or before the 2022 deadline.
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