Below, EPI economist Ben Zipperer responds to the U.S. Department of Labor’s final rule requiring federal contractors to pay a minimum wage of $15 per hour starting January 30, 2022. Zipperer estimates the rule will benefit up to 390,000 federal contractors, half of whom are Black or Hispanic.  

One interesting consequence to look for is how much the policy may raise wages in the rest of the labor market, given substantial turnover in firms that are federal contractors.

While not a substitute for a universal $15 min wage, there may be important spillover effects

— Ben Zipperer (@benzipperer) November 22, 2021

Also higher contractor wages may cause other firms in the local labor market to raise wages

Recently Amazon’s $15 starting wage increased pay in other low-wage occupations according to research by @EDerenoncourt @ClemensNoelke @profsheena @Bledi_Taska https://t.co/VsAVa2aMGt pic.twitter.com/nyb1RAt3Li

— Ben Zipperer (@benzipperer) November 22, 2021

We know from @KristaRuffini’s research that higher minimum wages increased the productivity of nursing homes:

Lower employee turnover improved nursing home quality and patient health, in this case literally saving liveshttps://t.co/XjCjVOdcPm pic.twitter.com/FElSAIwtIJ

— Ben Zipperer (@benzipperer) November 22, 2021

All in all this the new $15 minimum wage for federal contracts is excellent policy, another step to fixing a labor market that doesn’t deliver adequate wages

Detailed estimates of who will benefit can be found in my and @hshierholz’s formal comments https://t.co/O0YkvHZn2x pic.twitter.com/4ISzqfxVdZ

— Ben Zipperer (@benzipperer) November 22, 2021