DOL Proposes Rule Setting $15 Minimum Wage for Federal Contractors

Contractor groups say regulation would have little impact on construction.

The new directive says: "Raising the minimum wage enhances worker productivity and generates higher-quality work by boosting workers' health, morale and effort; reducing absenteeism and turnover; and lowering supervisory and training costs."
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Following up on an April executive order from President Joe Biden, the US Dept. of Labor has proposed a regulation requiring federal contractors, including construction companies, to pay workers a minimum of $15 per hour.

But construction contractor groups say the rule, which DOL announced on July 21, will have limited impact on their operations and pay levels because most federal construction contracts are subject to federal Davis-Bacon Act prevailing-wage requirements.

Pay rates under the law, which covers federal prime construction contracts of more than $2,000, generally exceed $15. That statute

Under the proposed regulation, the new minimum wage would apply to federal contracts based on solicitations issued on or after Jan. 30, 2022, and entered into on or after March 30. It also would apply to subcontracts that fall under a prime contract.

[View text of proposed rule as published in the Federal Register here.]

The proposed regulation also continues to index the minimum wage for federal contractor work for inflation. The Labor Dept. will accept comments on its proposal until Aug. 23.

Construction Groups Comment

Brian Turmail, an Associated General Contractors of America spokesman, said in an email to ENR that “since most federal construction work is covered by Davis-Bacon, construction already pays well above the new wage level in all but the most rural regions.” He added that "in the very limited number of cases where wage rates may be impacted, it just means federal officials will have to pay more for construction projects in those regions."

In a statement outlning the proposed regulation's provisions, the Associated Builders and Contractors reiterated a statement that Ben Brubeck, its vice president of regulatory, labor and state affairs, issued when Biden signed the executive order.

Brubeck said ABC members that do federal work pay wages "substantially higher than $15 per hour under the Davis-Bacon Act (DBA) and, to a lesser extent, the Service Contract Act (SCA)."

He added, "The primary concern with this executive order is not the wage rate itself but rather the unlawful and unprecedented power grab by the executive branch to set a new minimum wage in direct contravention of the DBA and SCA."

The April 27 executive order states: “Raising the minimum wage enhances worker productivity and generates higher-quality work by boosting workers’ health, morale and effort; reducing absenteeism and turnover; and lowering supervisory and training costs.”

[View ENR 04/27/2021 story on executive order here.]

Tom Ichniowski has been writing about the federal government as ENR’s Washington Bureau Chief since the George H.W. Bush administration, and he has covered at least five major highway bills. A recognized expert on government policy on infrastructure and regulation, Tom is also a Baltimore native and Orioles fan who grew up rooting for Brooks and Frank Robinson. He is a graduate of Columbia College and Columbia’s graduate school of journalism, where he once used “unrelentless” in a headline.