The Biden administration is taking strides in delivering on its promise to raise the minimum wage. Earlier this week, President Biden signed an executive order that would raise the minimum wage for federal contractors and tipped employees to $15 an hour. This raise is a big jump from the previous $10.95 an hour minimum wage for federal contractors and $7.65 for tipped workers. The administration previously pushed for the wage increase in the $1.9 trillion aid package where it was rejected in the senate.

This new wage increase will impact federal contractors and tipped employees who work on government contracts. It will include a cost-of-living increase that will occur every year starting in 2022. Government agencies will need to begin the new wage payment starting January 30, 2022. Starting March 30, 2022, all new contracts will need to implement the new wage. The administration explained, “Employers may seek to raise wages for workers earning above $15 as they try to recruit and retain talent.”

The workers who will be impacted by this wage increase include nursing assistants who care for veterans, foodservice and cafeteria workers, laborers who work on federal infrastructure, cleaning professionals, and maintenance workers in the federal sector.

Senior officials for the Biden administration explain that this wage increase will not result in increased taxes and that it will not have a negative impact on businesses that hire federal contractors. Administration officials explain that the wage hike will boost employee morale and increase productivity resulting in higher quality work. The officials also explained that the move will lead to fewer turnover rates, absentee rates, and supervisory costs. In a statement released by the White House, they explain, “research shows that when the minimum wage is increased, the workers who benefit spend more, a dynamic that can help boost local economies.”

Research conducted by the Congressional Budget Office, a nonpartisan organization, estimates that over the next four years this wage increase will help lift over one million people out of poverty. However, there is some concern that the increase may also lead to fewer jobs.

The new move has gained the support of many organizations and individuals who live at or below the poverty line. The president and co-founder of One Fair Wage, Saru Jayaraman, shared with CNBC, “Phasing out the subminimum wage for tipped federal contractors and ensuring that federally contracted workers with disabilities are paid equitably, President Biden is making sure that the federal government does not perpetuate the discriminatory wages that are most often paid to women, people of color and people with disabilities.”

Not all are thrilled, however. Many Republicans and business owners argue that raising the federal minimum wage could potentially have a negative impact because small business owners won't be able to afford their employees and that the move will result in fewer jobs. California Business owner Chuck Van Fleet shared with CNN his fears of raising the minimum wage. He explains, "Minimum wage is meant to be a starting wage, not a living wage. A minimum wage is there so we can hire people with little to no experience and train them for future higher-paying positions."

Raising the federal minimum wage for federal contractors and tipped workers is the administration's latest success in its goal of raising the wage nationwide. Vermont’s Senator Bernie Sanders has been one of the biggest supporters of the move toward a $15 minimum wage. Sanders explains, "If anybody thinks that we're giving up on this issue, they are sorely mistaken. If we have to vote on it time and time again, we will and we're going to succeed. The American people understand that we cannot continue to have millions of people working for starvation wages."