Federal Contractor Minimum Wage Under EO 13658 Rises to $14.05 on January 6

The U.S. Department of Labor will raise the minimum wage on federal contracts covered by Executive Order 13658 to $14.05 per hour on January 6, 2027, up from $13.65. The tipped minimum cash wage on those contracts rises to $9.85 from $9.55. The Wage and Hour Division published the notice on October 8 Federal Register. The increase applies only to a shrinking group of older contracts, but contractors holding Davis-Bacon or Service Contract Act work from that period need to confirm which rate governs each agreement Construction Dive.

What Happened

The notice, document number 2026-20646, was signed October 2 by Wage and Hour Administrator Andrew B. Rogers and published October 8. The regulations require at least 90 days of notice before a new rate takes effect, which sets the effective date at January 6, 2027 Federal Register.

The current rates of $13.65 and $9.55 took effect on May 11, 2026 U.S. Department of Labor. The new figures arrive less than eight months after the last change, which followed a notice published on February 9, 2026 Federal Register.

How the Rate Was Calculated

Executive Order 13658 ties the annual adjustment to the Consumer Price Index for Urban Wage Earners and Clerical Workers. The department compared the average index level for July 2025 through June 2026, which was 320.866, with the average for the prior twelve months, 311.293. That produced an increase of 3.075% Federal Register.

• Applying 3.075% to $13.65 gives $14.07, which the order requires to be rounded to the nearest five cents: $14.05 Federal Register.
• The tipped cash wage is set at 70% of the full rate. Seventy percent of $14.05 is $9.83, rounded to $9.85 Federal Register.
• The department noted that the Bureau of Labor Statistics did not collect price data from October 1 through November 12, 2025 because of a lapse in federal appropriations Federal Register.

Under the order, the rate can never be set lower than the prior amount Federal Register.

Which Contracts Are Covered

This is the part that causes the most confusion. The rate applies to certain contracts entered into between January 1, 2015 and January 29, 2022 that were not renewed or extended, through an exercised option or otherwise, on or after January 30, 2022 Federal Register. The order primarily covers workers on federal contracts subject to the Davis-Bacon Act and the Service Contract Act U.S. Department of Labor.

Contracts for seasonal recreational services on federal lands are not subject to the order U.S. Department of Labor. Contracts entered into on or after January 30, 2022 are not covered by this notice Federal Register.

The department acknowledged that the pool is small. The notice says the number of covered contracts has decreased significantly and continues to dwindle, though some remain Construction Dive.

How We Got Here

• 2014: Executive Order 13658 set a $10.10 minimum wage for federal contractors starting January 1, 2015, with annual inflation adjustments Construction Dive.
• 2018: Executive Order 13838 exempted seasonal recreational services and equipment rental on federal lands Federal Register.
• 2021: Executive Order 14026 raised the minimum to $15.00 for contracts entered into, renewed or extended on or after January 30, 2022, and superseded the earlier order where the two conflicted Federal Register.
• March 14, 2025: Executive Order 14236 revoked Executive Order 14026 Federal Register.

With the 2021 order revoked, the department says it is no longer enforcing that order or its implementing rule and plans to rescind the rule U.S. Department of Labor. The 2014 order, however, was never revoked. It remains in effect for the older contracts that were not brought under the 2021 order, and that is why an annual rate notice is still being issued Construction Dive.

Where Things Stand

Nothing changes until January 6, 2027. Until then, contractors on covered agreements must pay at least $13.65 and $9.55 U.S. Department of Labor. The department said the new rate will also be reflected on Davis-Bacon and Service Contract Act wage determinations, which are published on SAM.gov, and on an updated poster on the Wage and Hour Division website Federal Register.

Contractors must pay no less than the rate in effect during each year a covered contract is performed, so a multi-year agreement steps up with each notice U.S. Department of Labor.

Implications for Owners, Developers, Contractors and Subs

• Federal contractors: review active federal contracts by award date and option history. An agreement awarded between 2015 and early 2022 with no option exercised since January 30, 2022 is the profile this notice covers. Everything else falls outside it.
• Construction firms on Davis-Bacon work: for most skilled classifications, the prevailing wage on the determination is well above $14.05, and the higher rate governs. The order matters mainly for the lowest-paid classifications and for workers performing in connection with the contract.
• Service contractors: janitorial, grounds, food service and similar Service Contract Act work on long-running legacy agreements is where the floor is most likely to set actual pay. Tipped positions are affected by the $9.85 cash wage.
• Subcontractors: the obligation flows down. A sub on a covered prime contract should confirm with the prime which order applies and make sure the correct poster is displayed.
• Estimators and payroll staff: update rate tables for work performed on or after January 6, 2027, and remember that state and local minimum wages may already be higher than the federal contractor floor.

What to Watch

• The formal rescission of the rule that implemented the 2021 order, which the department has said it plans.
• Any further executive action on federal contractor wage floors.
• Updated wage determinations on SAM.gov that carry the new rate.

Bottom Line

The dollar change is modest and the number of affected contracts is small, but the rule is easy to misapply because coverage turns on when a contract was signed and whether it has been extended. A short review of legacy federal agreements before January will tell a contractor whether the $14.05 floor applies to any of its work.

Image credit: Josue Isai Ramos Figueroa on Unsplash. Free-license stock photo of construction workers, not related to a specific federal project. Image from Unsplash.

Sources

• Federal Register, Minimum Wage for Federal Contracts Covered by Executive Order 13658, Notice of Rate Change in Effect for 2027: https://www.federalregister.gov/documents/2026/10/08/2026-20646/minimum-wage-for-federal-contracts-covered-by-executive-order-13658-notice-of-rate-change-in-effect
• Construction Dive, DOL to up minimum wage to $14 per hour for federal contractors: https://www.constructiondive.com/news/dol-to-up-minimum-wage-federal-contractors/832509/
• U.S. Department of Labor, Wage and Hour Division, Executive Order 13658, Establishing a Minimum Wage for Contractors: Annual Update: https://www.dol.gov/agencies/whd/government-contracts/minimum-wage