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- President Trump has rescinded the $17.75 hourly minimum wage for federal contractors, a policy set by his predecessor Joe Biden.
- The move reverts the minimum wage to $7.25 an hour or applicable state minimum wages, affecting roughly 20% of the U.S. workforce.
- Critics argue the higher wage made it difficult for smaller businesses to compete for federal contracts.
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Essential Context
On March 17, 2025, President Trump repealed an executive order issued by Joe Biden that had raised the minimum wage for federal contractors to $17.75 per hour. This decision reverses a policy that was intended to promote economy and efficiency in federal procurement by ensuring fair compensation for workers.
Core Players
- Donald Trump – President of the United States
- Joe Biden – President Trump of the United States
- Federal Contractors – Companies and entities contracting with the federal government
- U.S. Department of Labor – Responsible for implementing and enforcing labor regulations
Key Numbers
- $17.75 – The minimum wage set by Biden’s executive order
- $7.25 – The federal minimum wage that will now apply
- 20% – Approximate percentage of the U.S. workforce employed by federal contractors
- 500,000 – Estimated number of employers affected by the wage change
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The Catalyst
President Trump’s decision to rescind the $17.75 minimum wage for federal contractors was part of a broader move to repeal nearly 20 Biden-era memos and executive orders. This action reflects ongoing debates about the role of government in regulating wages and the impact on businesses and workers.
The original executive order, signed by President Biden in April 2021, aimed to ensure that workers on federal contracts were adequately compensated, with annual increases to the minimum wage.
Inside Forces
The repeal is seen as a victory for business groups and Republicans who argued that the higher minimum wage made it difficult for smaller businesses to compete for federal contracts. Critics also pointed out that the wage was too high for areas with lower costs of living.
On the other hand, labor advocates and Democrats have expressed concern that the lower wage will negatively impact the livelihoods of thousands of workers.
Power Dynamics
The power to regulate federal contracting is rooted in a 1949 law that allows the president to make necessary adjustments to promote the economy and efficiency. Courts have upheld the authority of the president to set minimum wages for federal contractors, although there have been legal challenges to Biden’s order.
Trump’s move leverages this executive power to align with his administration’s policies and the interests of his supporters.
Outside Impact
The repeal has significant broader implications. For workers, it means a potential reduction in earnings, especially in regions where the cost of living is high. For businesses, it could ease the financial burden of complying with higher wage requirements, but may also affect their ability to attract and retain skilled workers.
The decision also sets a precedent for future executive actions on labor policies and federal contracting.
Future Forces
Looking ahead, the impact of this decision will be closely watched. Labor groups and Democrats may push for legislative action to reinstate or increase the minimum wage for federal contractors. Meanwhile, business groups may advocate for further deregulation.
The Supreme Court could also play a role if legal challenges to Trump’s action are brought forward.
Data Points
- April 2021: Biden signs Executive Order 14026 to increase the minimum wage for federal contractors to $15 an hour with annual increases.
- January 2022: The minimum wage increases to $15 an hour under Biden’s order.
- January 2025: The minimum wage was set to increase to $17.75 before Trump’s repeal.
- March 17, 2025: Trump rescinds the $17.75 minimum wage for federal contractors.
The repeal of the $17.75 minimum wage for federal contractors marks a significant shift in labor policy and federal contracting regulations. As the landscape continues to evolve, it will be crucial to monitor the impacts on workers, businesses, and the broader economy.
