Department of Labor, Office of the Secretary of Labor: Increasing the Minimum Wage for Federal Contractors

B-333791

December 7, 2021

The Honorable Patty Murray
Chairwoman
The Honorable Richard Burr
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate

The Honorable Robert C. “Bobby” Scott
Chairman
The Honorable Virginia Foxx
Ranking Member
Committee on Education and Labor
House of Representatives

Subject:  Department of Labor, Office of the Secretary of Labor: Increasing the Minimum Wage for Federal Contractors

Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Department of Labor (DOL), Office of the Secretary of Labor entitled “Increasing the Minimum Wage for Federal Contractors” (RIN:  1235-AA41).  We received the rule on November 24, 2021.  It was published in the Federal Register as a final rule on November 24, 2021.  86 Fed. Reg. 67126.  The effective date is January 30, 2022.

DOL stated the final rule finalizes regulations to implement an Executive Order titled “Increasing the Minimum Wage for Federal Contractors.”  86 Fed. Reg. 22835.  DOL further stated the Executive Order raises the hourly minimum wage paid by contractors to workers performing work on or in connection with covered federal contracts to $15.00 per hour, beginning January 30, 2022; and beginning January 1, 2023, and annually thereafter, an amount determined by the Secretary of Labor.

Enclosed is our assessment of DOL’s compliance with the procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule.  If you have any questions about this report or wish to contact GAO officials responsible for the evaluation work relating to the subject matter of the rule, please contact Shari Brewster, Assistant General Counsel, at (202) 512-6398.

Shirley A. Jones
Managing Associate General Counsel

Enclosure

cc:  Robert Waterman
Compliance Specialist

ENCLOSURE
REPORT UNDER 5 U.S.C. § 801(a)(2)(A) ON A MAJOR RULE
ISSUED BY THE
DEPARTMENT OF LABOR,
OFFICE OF THE SECRETARY OF LABOR
ENTITLED
“INCREASING THE MINIMUM WAGE FOR FEDERAL CONTRACTORS”
(RIN:  1235-AA41)

(i) Cost-benefit analysis

The Department of Labor (DOL) conducted an economic analysis of this final rule.  DOL stated that during the first 10 years the rule is in effect, average annualized direct employer costs are estimated to be $2.4 million.  DOL further stated the estimated average annualized transfer payments, between employers to employees in the form of higher wage rates, are $1.7 billion per year over 10 years.  DOL concluded the rule has many benefits for federal contract workers but, due to data limitations, these benefits are not monetized.  DOL noted the rule will promote economy and efficiency in the form of improved government services, increased morale and productivity, reduced turnover, reduced absenteeism, and reduced poverty and income inequality for federal contract workers.

(ii) Agency actions relevant to the Regulatory Flexibility Act (RFA), 5 U.S.C. §§ 603–605, 607, and 609

DOL determined this rule is not expected to have a significant economic impact on a substantial number of small entities.

(iii) Agency actions relevant to sections 202–205 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. §§ 1532–1535

DOL stated this final rule includes a federal mandate that would result in increased expenditures by the private sector of more than $158 million in at least one year, and could potentially result in increased expenditures by state and local governments that hold contracts with the federal government.  DOL further stated the rule will not result in increased expenditures by tribal governments because they are generally excluded from coverage.

(iv) Other relevant information or requirements under acts and executive orders

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.

On July 22, 2021, DOL published a proposed rule.  86 Fed. Reg. 38816.  DOL stated it received approximately 275 comments from a variety of interested stakeholders, such as labor organizations; contractors and contractor associations; worker advocates; contracting agencies; small businesses; and workers.  DOL further stated it strongly disagreed with comments addressing its scope of rulemaking authority and comments that the rule conflicts with other laws.  Finally, DOL explained that all other comments were addressed in the rule.

Paperwork Reduction Act (PRA), 44 U.S.C. §§ 3501-3520

DOL stated it submitted the identified information collection contained in the proposed rule to the Office of Management and Budget (OMB) for review in accordance with the PRA under control numbers 1235–0021 and 1235–0018.  DOL further stated it has resubmitted revised information collections to OMB for approval and intends to publish a notice announcing OMB’s decision regarding this information collection request.  DOL stated that the estimated annual burden hours and cost associated with control number 1235-0021 is 12,748 (56 burden hours due to the final rule) and $0, respectively.  DOL stated that the estimated annual burden hours and cost associated with control number 1235-0018 is 3,626,426 (0 from the final rule) and $0, respectively. 

Statutory authorization for the rule

DOL promulgated this final rule pursuant to section 301 of title 5, United States Code.

Executive Order No. 12866 (Regulatory Planning and Review)

DOL stated that OMB determined that this final rule is economically significant under the Order.

Executive Order No. 13132 (Federalism)

DOL stated the final rule will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.