Living Wage for Federal Contractors Act
- Sponsor
- Rep. Adams, Alma S. [D-NC-12]
- Committees
- Education and Workforce Committee (primary)
- Last action
- Jul 2, 2026
Bottom line
The bill mandates a significant increase in the minimum wage for federal contract workers, including tipped employees, and ensures future adjustments are tied to inflation, potentially increasing labor costs for federal contractors and improving wages for affected workers.
What it actually does
This bill, titled the "Living Wage for Federal Contractors Act," establishes a new minimum wage for employees of federal contractors, starting at $17.00 per hour and incrementally increasing to $25.00 per hour over five years. After this period, the wage will be adjusted annually based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). It also sets a separate, rising minimum wage for tipped federal contractors, aiming for parity with the standard minimum wage after five years.
Proponents argue
Supporters argue this bill ensures that federal contractors pay a living wage, improving economic security for thousands of workers who perform essential services for the government. They contend that a higher minimum wage reduces poverty, boosts worker morale and productivity, and reduces employee turnover, ultimately leading to higher quality services for the federal government. Furthermore, indexing the wage to inflation will prevent its value from eroding over time.
Opponents contend
Opponents might argue that increasing the minimum wage for federal contractors will significantly raise the cost of federal contracts, leading to higher taxes or reduced government services. They may also contend that such mandates interfere with market forces, potentially leading to job losses or reduced hiring by contractors struggling to absorb increased labor costs, especially for smaller businesses.
The bill is concise and clearly structured, making it accessible for an informed reader to understand its core provisions within a short timeframe.
Section 2(a)
Establishes Phased Minimum Wage Increases for Federal Contractors
This provision sets a new minimum hourly wage for all federal contractors, starting at $17.00 per hour. It then mandates annual increases to $19.00, $21.00, $23.00, and finally $25.00 per hour over a five-year period. After the fifth year, the minimum wage will be adjusted annually based on inflation.
Supporters argue
Proponents argue this provision directly addresses wage stagnation for federal contract workers, ensuring they earn a living wage that keeps pace with the cost of living. This is seen as a moral imperative and an economic stimulus for low-wage workers.
Critics contend
Opponents would argue that these mandated wage increases will significantly inflate the cost of federal contracts, potentially leading to fewer contracts, reduced services, or increased taxpayer burden. They might also claim it could disadvantage smaller contractors who have less capacity to absorb higher labor costs.
Tradeoffs
Balances the goal of improving worker welfare and economic equity against concerns about increased government spending and potential impacts on contractor competitiveness and employment levels.
Section 2(b)
Annual Inflation Adjustment for Federal Contractor Minimum Wage
After the initial five-year phase-in, this provision requires the Secretary of Labor to annually adjust the federal contractor minimum wage based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This ensures that the purchasing power of the minimum wage is maintained over time, preventing its erosion due to inflation.
Section 2(c)
Phased Increase to Full Minimum Wage for Tipped Federal Contractors
This section establishes a separate, increasing minimum hourly rate for tipped federal employees, starting at $13.00 per hour. It mandates annual increases to $16.00, $19.00, $22.00, and finally $25.00 per hour over five years. After this period, the minimum wage for tipped workers will align with the standard federal contractor minimum wage, effectively eliminating the sub-minimum wage for tipped employees.
Section 2(d)
Establishes Enforcement for Federal Contractor Minimum Wage
This provision outlines enforcement measures, including the ability for the Federal Government to terminate contracts for failure to pay required wages, hold contractors liable for excess costs, and withhold accrued payments to directly pay underpaid workers. It also allows for civil actions by workers, prohibits using acceptance of lower wages as a defense, and mandates a list of violating contractors who are barred from new contracts for three years. Civil penalties of up to $1,100 per violation are also established for repeated or willful violations.
Section 2(d)(3)
Exemption for Indian Self-Determination and Education Assistance Act Contracts
This provision explicitly exempts grants, contracts, or agreements entered into under the Indian Self-Determination and Education Assistance Act (ISDEAA) where an Indian Tribe or Tribal organization is a party, from the federal contractor minimum wage requirements.
Section 3
Amends Davis-Bacon Act to Use Higher of Prevailing or New Federal Contractor Minimum Wage
This section amends the Davis-Bacon Act (which covers construction contracts) to require that the minimum wages paid to laborers and mechanics are the higher of either the locally prevailing wage determined by the Secretary of Labor or the new federal contractor minimum wage established by this Act. This ensures construction workers on federal projects benefit from the higher rate.
Section 4
Amends Service Contract Act to Use New Federal Contractor Minimum Wage
This section amends the Service Contract Act (which covers service contracts) to replace its reference to the Fair Labor Standards Act minimum wage with the new federal contractor minimum wage established by this Act (including the specific rates for tipped employees). This ensures service contract workers receive the new, higher minimum wage.
Section 5
Amends Walsh-Healey Act to Use Higher of Prevailing or New Federal Contractor Minimum Wage
This section amends the Walsh-Healey Public Contracts Act (which covers procurement contracts for materials, supplies, articles, or equipment) to require that employees on such contracts are paid the higher of either the prevailing minimum wages determined by the Secretary of Labor for similar work in the locality or the new federal contractor minimum wage established by this Act.
Grants the Secretary of Labor discretion to select the base period (most recent month, quarter, or year) for calculating the CPI-W for inflation adjustments.
Section 2(b)(3)(B)
Why it matters:Standard legislative practice to define terms and grant administrative flexibility within technical sections.
Case for: Allows the Secretary of Labor flexibility to use the most accurate and timely data available for wage adjustments, ensuring the inflation index is current.
Case against: Could be argued that this discretion allows for potential manipulation or inconsistent application of the inflation adjustment, depending on which base period yields a more favorable outcome for a particular political agenda.
Estimated impact: Minor impact on the exact timing and magnitude of annual wage adjustments, but not on the overall policy.
Specifies that if the inflation-adjusted minimum wage is not a multiple of $0.05, such amount shall be rounded up to the nearest multiple of $0.05.
Section 2(b)(2)
Why it matters:Standard legislative practice for technical precision in calculations.
Case for: Ensures that workers consistently benefit from any rounding, slightly favoring wage increases. It also provides a clear, unambiguous rule for calculation.
Case against: Could be seen as a minor, consistent upward bias in wage adjustments that slightly increases costs for contractors over time, though the impact is minimal per adjustment.
Estimated impact: Negligible on a per-worker basis, but cumulatively could add a small amount to federal contract costs over many years.