Thursday, September 17, 2015

Minimum Wage Rate for Government Contractors Will Rise in January

The Department of Labor announced yesterday that the minimum wage for workers performing work on Government contracts will increase from the current $10.10 per hour to $10.15 per hour beginning January 1, 2016. This action is in keeping with the indexing provisions in the President's Executive Order from February 2014 that established the minimum wage for Government contractors.

The minimum wage is indexed to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Increases are rounded to the nearest $0.05. The Labor Department determined that the annual percentage increase in the CPI-W was 0.345 percent. Applying that percentage to the current minimum wage rate results in a new wage rate of $10.13 per hour ($10.10 times 0.345%). However, since the EO requires rounding to the nearest $0.05, the new rate is rounded up to $10.15 per hour.

There is certain to be some grumbling about the paltry pay raise - approximate 1/2 percent. Especially when Government workers are scheduled to receive 1.3 percent in January.

The minimum wage provision affects approximately 560,000 contractor employees (and that five cent increase will cost contractors and ultimately the Government, $58.2 million per year).

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