May 23, 2025
Labor advocates and progressive groups have criticized the move as an attack on working-class individuals, particularly when rising living costs are already a significant concern.
President Donald Trump has rescinded a key Biden-era executive order that had raised the minimum wage for federal contractors to $17.75 per hour, a move that labor advocates warn will negatively impact hundreds of thousands of low-wage workers, with a particularly significant effect on Black workers, especially in states where Black Americans constitute a large share of the federal workforce.
The rescission, enacted through Executive Order 14236 on March 14, effectively undoes Executive Order 14026, signed by President Joe Biden on April 27, 2021, which had gradually increased the minimum wage for federal contract employees.
The now-revoked Biden order, which had been in full effect since January 20, 2022, raised the minimum wage for these workers and directed the Secretary of Labor to make future adjustments to keep pace with inflation.
As of January 1, this had resulted in a minimum wage of $17.75 for those employed by private companies and nonprofits contracted by the federal government. While raising the federal minimum wage for all workers requires Congressional action, the Department of Labor has the authority to set higher wage standards specifically for federal contractors. These contractors encompass a broad spectrum of workers across various industries, from janitorial and food service staff to IT professionals.
Estimates from the Economic Policy Institute (EPI) in 2021 projected that approximately 1.9 million individuals, including construction workers, held federal contract jobs in 2022. Around 390,000 workers, representing about one-fifth of the entire federal contract workforce, were expected to see their wages rise due to Biden’s Executive Order 14026. The EPI further estimated that these workers would collectively experience a $1.2 billion increase in pay.
Advocates for the higher minimum wage argue that it ensures taxpayer dollars support jobs that offer a living wage, rather than incentivizing a “race to the bottom” where contractors compete by providing the lowest possible pay. They also point to research suggesting that minimum wage increases lead to lower employee turnover, improved worker performance, and increased efficiency.
For example, a 2021 study by Krista Ruffini indicated that minimum wage hikes in nursing homes correlated with better worker performance, reduced inspection violations, fewer preventable health conditions, and lower resident mortality.
Trump’s rescission of Executive Order 14026 is poised to reverse these gains for approximately 390,000 low-wage federal contract workers entitled to at least $15 per hour under the regulation. Should the Trump administration fully dismantle this rule, the minimum wage for these contractors would likely revert to the level set by the Obama administration in 2014, which was $13.30 per hour. Alternatively, if the administration were to eliminate the higher minimum wage for federal contractors, those working in states without a higher minimum wage could see their minimum wage fall to the current federal minimum of just $7.25 per hour.
Trump’s Executive Order 14236, “Additional Rescissions of Harmful Executive Orders and Actions,” directly revoked Executive Order 14026. Following this, the Department of Labor announced it would cease enforcing the Biden-era order and its implementing rule, initiating steps to rescind 29 CFR part 23 officially.
Labor advocates and progressive groups have criticized the move as an attack on the working class, particularly when rising living costs are already a significant concern. They argue that the gross decision grants private sector companies with government contracts the freedom to reduce the wages of hundreds of thousands of employees. Data from the Bureau of Labor Statistics (BLS) in 2022 provides context for the impact of minimum wage policies. That year, about 2 percent of Black hourly workers earned the federal minimum wage or less.
Disproportionate Impact on Black Workers
The rescission of the federal contractor minimum wage is anticipated to disproportionately affect Black workers, who historically have found more equitable job opportunities in the public sector compared to the private sector.
Data highlights that while 18.7% of all federal workers are Black, their representation is significantly higher in certain states. The Black worker share of state and federal employment is highest in Georgia (43.8%), Louisiana (37.6%), Mississippi (34.8%), and Tennessee (34.6%). The repeal of the $17.75 minimum wage for federal contractors in these states, where a substantial portion of the federal workforce is Black, could have a particularly pronounced negative economic impact on Black communities.
The EPI’s earlier analysis of the $15 minimum wage for federal contractors indicated that a significant percentage of those who would receive a wage increase were workers of color, including many Black workers, often in lower-wage service sector jobs within federal contracting. The rollback of this wage floor threatens to disproportionately harm these workers and potentially widen existing racial disparities in income and wealth.
The Trump administration claims its policies prioritize American workers. Yet, rescinding the federal contractor minimum wage follows a pattern of decisions that undermine wage standards for working-class individuals.
Labor advocates contend that this move contradicts claims of supporting American workers, leaving many vulnerable to potential pay cuts. The existing wage protections under the Service Contract Act (SCA) and the Davis-Bacon Act (DBA) may not adequately compensate these workers, as their wage levels can be lower and are not always regularly adjusted for inflation.
The repeal also introduces uncertainty for contractors and instability for the affected workforce.
Trump’s decision to rescind the executive order raising the minimum wage for federal contractors is expected to disproportionately harm Black workers, particularly in states with a high percentage of Black federal employees.
The rollback threatens to lower wages, reduce financial security, and potentially exacerbate racial economic disparities, raising concerns about the administration’s commitment to equitable economic opportunities.
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