In a move that starkly exposes just how disingenuous the Trump administration’s pro-worker rhetoric really is, President Trump rescinded the Biden administration’s executive order that increased the minimum wage for workers on federal contracts. The Biden-era rule implementing that executive order raised the minimum wage for workers on federal contractors to $15 an hour in 2022 and indexed it to inflation going forward. As of January 1, it was $17.75 an hour.
Trump rescinded this order two weeks ago and I’ve been struck by the lack of attention it has received. This action is not just a bureaucratic adjustment—it is a direct assault on the livelihoods of hundreds of thousands of workers.
When the Biden-era rule was being developed, we estimated that it would give a raise to nearly 400,000 low-wage federal contractors. Who are these workers? They are janitors who clean government buildings, food service workers on military bases, cashiers in gift shops in national parks, and security guards protecting federal property—everyday people trying to make rent, buy groceries, and support their families. A minimum wage of $17.75 an hour translates into annual earnings of less than $37,000 for a full-time worker. The Trump administration is acting to ensure they get even less.
The Trump Department of Labor (DOL) will need to go through the rulemaking process to actually overturn the higher minimum wage for federal contractors—just rescinding the executive order doesn’t overturn the rule that was put in place to implement it. Until that happens, the minimum wage for federal contractors is still technically $17.75. However, Trump’s DOL has publicly announced they will no longer be enforcing the higher minimum wage. In other words, there won’t be any consequences for not complying, inviting employers to cheat their workers.
It is not clear how low the Trump administration will ultimately set the minimum wage for federal contractors. If they revert the federal contractor minimum wage to what it was before the Biden-era rule, it would drop to $13.30 an hour. That would mean a 25% pay cut for a full-time federal contractor earning the minimum wage—a loss of over $9,000 a year.
The most drastic move the administration could take would be to eliminate the higher minimum wage for federal contractors entirely, which is well within the realm of possibility given that Trump has argued that a nationwide minimum wage “wouldn’t work” because of regional price differences.
If the Trump administration does end up eliminating the higher minimum wage for federal contractors, then federal contractors—unless they are in a state with a higher state minimum wage—will be subject to the disgracefully low national minimum wage of $7.25 per hour, which has not increased since 2009. Reverting to the national minimum wage of $7.25 would mean a nearly 60% pay cut for a full-time federal contractor making the minimum wage—a loss of roughly $22,000 a year. (It’s worth noting that all workers—not just federal contractors—need a higher minimum wage, but the president only has the authority to raise wages for federal contractors. It would require action from Congress to raise the minimum wage for all workers.)
For those who might believe that paying the lowest-wage federal contractors less could be a good-faith attempt at boosting government “efficiency,” think again. Rescinding this rule is much more likely to boost the profits of large government contractors—because they can pay workers less—rather than reduce the costs of government contracts.
To distract from his policies that actively harm workers for the sake of boosting the profits of their employers, Trump has floated gimmicky ideas like eliminating taxes on tips. Let’s be clear, “no tax on tips” isn’t a gift to workers, it’s a smokescreen that would benefit employers of tipped workers and harm more workers than it helps. If he really wanted to help tipped workers, he would push to end the subminimum wage for tipped workers and raise the minimum wage. Instead, he’s cutting minimum wages where he can—for federal contractors. But that’s Trump’s playbook: use pro-worker rhetoric while taking concrete steps to undermine workers’ rights and wages. Taking raises away from hundreds of thousands of low-wage workers while peddling a tax-break gimmick is just the latest example of his billionaire-first agenda.
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