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Trump Just Cut the Minimum Wage for Hundreds of Thousands of Private Sector Workers [1]

['Aurelia Glass', 'Associate Director', 'Media Relations', 'Senior Director', 'Government Affairs']

Date: 2025-04

The Trump administration has been making headlines for its attacks on federal workers, but it just opened a new front in its war on workers by scrapping minimum wage protections for hundreds of thousands of employees at private sector companies with government contracts. This latest attack could not have come at a worse time for workers, who are already concerned about rising costs but now face a threat to their livelihood.

25% Pay cuts that some workers on federal contracts may see as a result of President Trump’s executive order On March 14, President Donald Trump issued an executive order undoing a Biden-era regulation that raised the minimum wage for private sector workers on federal contracts to $17.75 per hour. That Biden administration rule raised the wages of hundreds of thousands of workers and helped ensure government contractors paid workers a decent wage. But now, there’s nothing stopping employers from slashing wages. Because of Trump’s new order, corporations working on government contracts are free to cut wages for hundreds of thousands of workers, as the U.S. Department of Labor will no longer enforce the Biden-era rule. An Obama-era rule remains in place, meaning some workers on federal contracts can now be paid a minimum of only $13.30 per hour—a pay cut of up to 25 percent.*

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Hundreds of thousands of private sector workers got raises under the now-scrapped Biden rule The federal government contracts out work to private sector companies to provide goods and services for the public, the military, and the government—from building and maintaining federal offices to providing uniforms for military service members. For a century, the government has been using its contracting system to set a standard to offer market wages and working conditions for private sector workers on federal contracts, while also boosting standards through minimum wages on several occasions. In 2021, the Biden administration established a regulation that set a higher minimum wage for workers on these contracts, raising the baseline from $10.95 per hour—established under a 2014 regulation—to $15 per hour, adjusted annually to account for inflation. Because wage increases have kept pace with inflation, a private sector worker on a government contract was earning at least $17.75 per hour, more than twice the current federal minimum wage of $7.25 per hour. The boost for workers from the Biden minimum wage increase that the Trump administration just nullified was substantial: 327,300 workers earned a raise, amounting to an average wage increase of $5,228 per year. Not only were these workers previously earning wages below $15 an hour, but they were also disproportionately workers without a college degree.

The boost for workers from the Biden minimum wage increase that the Trump administration just nullified was substantial: 327,300 workers earned a raise, amounting to an average wage increase of $5,228 per year.

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[1] Url: https://www.americanprogress.org/article/trump-just-cut-the-minimum-wage-for-hundreds-of-thousands-of-private-sector-workers/

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