(The Center Square ) – California Attorney General Rob Bonta and 21 other attorneys general filed an amicus brief supporting the federal government’s ability to raise the minimum wage for federal contractors.
In the case Nebraska v. Su, the Ninth Circuit Court of Appeals ruled that the Biden administration does not have the authority to increase federal workers’ minimum wage due to the Federal Property and Administrative Services Act (FPASA) of 1949.
“The FPASA’s operative sections do not authorize the minimum wage mandate. The President cannot issue an executive order instructing agencies to carry out the minimum wage mandate by pointing to any of the FPASA’s operative sections, and DOL similarly cannot issue a minimum wage rule under any of the FPASA’s operative sections,” the Nov. 5th ruling said.
Even though the appeals court overturned the lower court’s decision, federal contractors will still have a new minimum wage of $17.75 per hour starting on Jan. 1, 2025. It will be an increase of 55 cents from 2024’s wage.
The Department of Labor (DOL) in 2021 via President Joe Biden’s Executive Order 14026 created a federal minimum wage for contractors of $15 with subsequent annual increases.
The appeals court remanded the case for “further proceedings,” according to the ruling.
Bonta said in a statement that in California, the state knows that “fair wages and robust worker protections are good for business.”
“I strongly support the Department of Labor’s rulemaking lifting the minimum wage for federal contractors,” he said. “This commonsense, data-driven rate will help lift workers out of poverty while improving productivity and efficiency. It’s a win-win.”
According to Bureau of Labor Statistics data, however, the California restaurant industry shed 4,256 fast food jobs through June since the fast food minimum wage in the state rose from $16 to $20 per hour at the start of April.
In their amicus brief, the attorneys general support the DOL’s authority to set the federal contractor minimum wage.
Throughout the amicus brief, the attorneys general cite studies that show the benefits of raising the minimum wage. These studies say that increasing the minimum wage improves productivity, lessens turnover and enhances quality of service.
“The government’s choice to require certain federal contractors to be paid a higher minimum wage is amply supported by the literature on minimum wage increases and has yielded significant benefits not only for workers, but for the economy more broadly,” the brief said.
A Congressional Budget Office study showing what would happen if the federal minimum wage increased to $17 an hour by 2030 found that raising it would improve earning and family income for “most low-wage workers” and get some of them out of poverty. However, this wage change would also hurt other low-wage workers by causing them to either lose their jobs or have their hours cut, hurting their family income.
Furthermore, a Harvard Business Review study found that, after an increase of $1 to the state minimum wage in California, employees saw “net losses of at least $1,590 per year per employee – equivalent to 11.6% of workers’ total wage compensation.”
