The Trump administration has reignited a contentious labor debate by rescinding a Biden-era minimum wage rule for federal contract workers—a move that could slash pay by up to 25% for more than 300,000 workers across the country, according to a new analysis from the Center for American Progress (CAP).

The rollback, signed last month through executive order, undid a 2021 regulation by former President Joe Biden that had raised the minimum wage for workers on federal contracts to $15 per hour, with built-in increases tied to inflation. By January 2025, the rate had risen to $17.75 per hour. With Trump’s reversal, that wage floor has been wiped out, reverting the minimum standard to an older Obama-era policy that allows for as little as $13.30 per hour.

Thanks to the rollback, “corporations working on government contracts are free to cut wages for hundreds of thousands of workers,” the CAP analysis states. The author further argues that the policy shift is “a new front in the Trump administration’s war on workers.”

CAP’s estimate of a 25% pay cut is based on the wage differential between the now-scrapped $17.75 minimum and the lower $13.30 standard. The analysis also underscores how the affected workers—many of whom are employed in cleaning, food service, and maintenance roles—stand to lose thousands annually. For employees already on tight budgets, the implications are dire.

“The boost for workers from the Biden minimum wage increase that the Trump administration just nullified was substantial,” CAP’s report notes. The Department of Labor estimated in 2021 that 327,300 workers were impacted in the regulation’s first year, with many seeing wage increases that helped offset inflation and rising costs of living.

While the Department of Labor is expected to issue further guidance on enforcement of the older Obama-era standard, worker advocates warn that the rollback will deepen economic instability among low-wage federal contract workers. CAP argues that existing laws, like the Davis-Bacon Act—which sets prevailing wage standards on federal construction projects—do little to protect those workers who were just stripped of their wage increase.

“Other wage protections for workers on federal contracts exist,” CAP said, “but they are inadequate for protecting the workers who just saw their minimum wage taken away.”

The Economic Policy Institute (EPI), a left-leaning think tank, estimates that Biden’s executive order would have delivered $1.2 billion in total wage gains to workers in 2022 alone. They stress that higher contractor wages don’t just benefit workers—they ensure that federal funds support fair labor practices.

“A higher minimum wage for federal contractors helps ensure that taxpayer dollars incentivize good jobs, rather than low-wage jobs where contractors compete with each other in a race to the bottom,” EPI said in a statement. “A higher federal contractor wage standard is good for employers and the federal government overall.”

Trump’s executive order repealed 18 Biden-era executive actions in total, most of them related to labor, environmental protections, and equity-focused programs. Labor advocates see the reversal of the contractor wage rule as emblematic of a broader effort to dismantle worker-focused policy.

As inflation continues to affect purchasing power and economic inequality remains high, the loss of the $17.75 minimum wage could have far-reaching consequences—particularly for women, people of color, and workers without college degrees, who disproportionately occupy low-wage federal contract jobs.

With the 2024 election cycle now behind him, Trump’s administration is rapidly pursuing policy reversals that roll back progressive gains across a range of sectors. Whether or not Congress or the courts intervene to protect wage standards for federal contract workers remains to be seen.

Originally reported by Eloise Goldsmith in Common Dreams.