Federal Contract ‘Minimum Wage’ Hike Likely Unlawful

Charles C. W. Cooke lays out a number of reasons why Congress should exercise its power of the purse and censure the president if he makes good on his State of the Union promise to unilaterally increase the federal contractor “minimum wage.” Cooke rightly notes that the executive can indeed set the terms of its contracts, which normally would mean that the president could decide that he wouldn’t enter any contracts with contractors who pay their workers less than $10.10 per hour.

The problem with Cooke’s assessment that the proposed Executive Order is “probably, just about” legal, is that there is actually a statute on point that cabins the president’s discretion regarding wage terms in federal contracts for services.

Specifically, the Service Contract Act of 1965 requires that any contract for service work with the federal government (for example, security guards or cafeteria workers at federal buildings) include a provision specifying a minimum wage. This minimum wage for a federal contract shall be “determined by the Secretary [of Labor] or the Secretary’s authorized representative, in accordance with prevailing rates in the locality, or, where a collective-bargaining agreement, in accordance with the rates provided for in the agreement, including prospective wage increases provided for in the agreement as a result of arm’s length negotiations” (41 U.S.C. §6703). This minimum wage must at least meet the federal minimum wage, which serves as a floor for such contracts (41 U.S.C. §6704).

In other words, federal law requires that the default federal contract wage not be pulled out of a hat: rather, it must be assessed “in accordance with prevailing rates in the locality.” While it is unclear at this point what authority the president is relying upon to justify this $10.10 rate, what remains clear is that the specific statute on point — the Service Contract Act — sets clear limits on his discretion. If $10.10 per hour is the “prevailing” wage in New York for janitorial workers, then federal contracts for janitorial services in New York should set $10.10 as the wage for those services. But if $9.00 per hour is the “prevailing” wage for cafeteria workers in Nebraska, no Executive Order can require federal contracts for those services to pay those workers $10.10. And a contractor denied on that basis would have a viable lawsuit to invalidate that Executive Order.

— Andrew Kloster is a legal fellow in the Heritage Foundation’s Edwin Meese Center for Legal and Judicial Studies.

Most Popular


Romney Is a Misfit for America

Mitt’s back. The former governor of Massachusetts and occasional native son of Michigan has a new persona: Mr. Utah. He’s going to bring Utah conservatism to the whole Republican party and to the country at large. Wholesome, efficient, industrious, faithful. “Utah has a lot to teach the politicians in ... Read More
Law & the Courts

What the Second Amendment Means Today

The horrifying school massacre in Parkland, Fla., has prompted another national debate about guns. Unfortunately, it seems that these conversations are never terribly constructive — they are too often dominated by screeching extremists on both sides of the aisle and armchair pundits who offer sweeping opinions ... Read More

Fire the FBI Chief

American government is supposed to look and sound like George Washington. What it actually looks and sounds like is Henry Hill from Goodfellas: bad suit, hand out, intoning the eternal mantra: “F*** you, pay me.” American government mostly works by interposition, standing between us, the free people at ... Read More
Film & TV

Black Panther’s Circle of Hype

The Marvel Cinematic Universe (MCU) first infantilizes its audience, then banalizes it, and, finally, controls it through marketing. This commercial strategy, geared toward adolescents of all ages, resembles the Democratic party’s political manipulation of black Americans, targeting that audience through its ... Read More