The Corner

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


White Cats and Black Swans

Making a film of Cats is a bold endeavor — it is a musical with no real plot, based on T. S. Eliot’s idea of child-appropriate poems, and old Tom was a strange cat indeed. Casting Idris Elba as the criminal cat Macavity seems almost inevitable — he has always made a great gangster — but I think there was ... Read More
Politics & Policy

The Other Case against Reparations

Reparations are an ethical disaster. Proceeding from a doctrine of collective guilt, they are the penalty for slavery and Jim Crow, sins of which few living Americans stand accused. An offense against common sense as well as morality, reparations would take from Bubba and give to Barack, never mind if the former ... Read More
Health Care

The Puzzling Problem of Vaping

San Francisco -- A 29-story office building at 123 Mission Street illustrates the policy puzzles that fester because of these facts: For centuries, tobacco has been a widely used, legal consumer good that does serious and often lethal harm when used as it is intended to be used. And its harmfulness has been a ... Read More
Politics & Policy

May I See Your ID?

Identity is big these days, and probably all days: racial identity, ethnic identity, political identity, etc. Tribalism. It seems to be baked into the human cake. Only the consciously, persistently religious, or spiritual, transcend it, I suppose. (“There is neither Jew nor Greek, there is neither bond nor ... Read More

Wolf Warrior II Tells Us a Lot about China

The Chinese economy is taking a big hit as a result of the trade war with the U.S: A leading export indicator has fallen several months in a row, Chinese companies postponed campus recruitment, and auto and housing sales dropped. A number of U.S. manufacturers are moving production outside of China. So ... Read More