President Biden’s executive order requiring a $15 minimum wage for workers on federal contracts starting next year will have a “minor” impact on government contract spending of $1 billion to $2 billion annually, according to a new report.
“The [April 27] executive order will have a minor impact on overall contract spending,” said the analysis from Censeo Consulting Group published Wednesday. “In fiscal year 2019, the federal government spent approximately $597 billion on goods and services, supporting a contractor workforce of approximately 5 million individuals. Approximately 14% of this workforce (695,000 individuals) have job classifications whose hourly rates may be impacted by the executive order.”
Those individuals paid by the hour were working on contracts that represented only 3% of the government’s overall fiscal 2019 contract spending, or $20.6 billion. “And, as many individuals supporting these contracts currently receive wages above $15/hour, Censeo estimates that only 5% to 10% of this potential spend would ultimately be impacted by the EO,” said the report. “As such, the total impact to federal spending will likely be between $1 billion and $2 billion” annually.
Censeo noted this “generally aligns” with the cost estimate from the Economic Policy Institute. The consultancy used data from the Commerce and Labor departments, General Services Administration, System for Award Management and USAspending.gov, as well as interviews with relevant experts, for its analysis.
In terms of location, federal contract employees in Southern and Midwestern states are most likely to be impacted by the order. Also, rural areas versus urban ones will more likely be affected.
Censeo projected that the types of jobs and numbe ..
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