Federal Minimum Wage Should Be Indexed For Local Markets

A recent Law360 article explained that President Joe Biden's executive order increasing the minimum wage to $15 per hour for federal contractors has an expected impact that is "likely to vary significantly by region, potentially making federal work less attractive for some companies in lower-wage areas."

This executive order substantially increases the contractor minimum wage from $10.95 to $15, and will have a widely different impact across cities and states because wage rates for the same occupation vary substantially across areas. In contrast, a wage mandate indexed to local area pay rates would not have a substantially different impact across areas.

The $15 minimum wage for federal contractors will have the most negative impact on businesses employing workers in these jobs in lower-wage labor markets outside of the northeast and pacific regions. In this article, Stephen Bronars presents an alternative indexed minimum wage for federal contractors calculated so that it has an expected impact that does not vary substantially across metro areas.