The federal contractor minimum wage under Executive Order 13658 goes to $14.05 an hour on Jan. 6, 2027, up 40 cents from $13.65, according to a notice the Labor Department’s Wage and Hour Division published in the Federal Register on Oct. 8. The cash wage for tipped employees rises to $9.85 from $9.55.
The harder question for a contractor is whether a given contract is covered at all. The notice says the rate applies to contracts subject to the Davis-Bacon Act or the Service Contract Act that were entered into between Jan. 1, 2015, and Jan. 29, 2022, and haven’t been renewed or extended, by an exercised option or otherwise, on or after Jan. 30, 2022.
Which contracts the federal contractor minimum wage still reaches
That window exists because a later order, Executive Order 14026, set a $15 rate for contracts awarded or extended from Jan. 30, 2022. It was revoked on March 14, 2025, by section 2(d) of Executive Order 14236, the notice says. The 2014 order was never withdrawn. It still governs the older contracts, and the division still has to adjust its rate every year.
For a builder, that means a long-running Davis-Bacon job awarded in 2021 and still on its original term is in. A contract whose option was exercised in 2023 is out, by the notice’s own description of coverage. Every option exercised and every job closed out takes one more contract off the list, so the covered pool can only shrink. The notice gives no count of how many remain.
How the Wage and Hour Division got to $14.05
The arithmetic is prescribed in 29 CFR part 10. The division averaged the Consumer Price Index for Urban Wage Earners and Clerical Workers for July 2025 through June 2026 and got 320.866. The average for the prior 12 months was 311.293. That’s a 3.075% increase.
Applied to $13.65, it yields $14.070. The regulation requires rounding to the nearest five cents, so workers lose two cents to the rounding this year.
The tipped rate is fixed at 70% of the full rate. Seventy percent of $14.05 is $9.83, which rounds up to $9.85. If tips don’t cover the gap to $14.05, the contractor makes up the difference in cash wages.
What Davis-Bacon contractors should check before Jan. 6
The timing is unusual. The current $13.65 rate was announced Feb. 9, 2026, and took effect May 11, which makes this the second change in eight months. The Jan. 6 date isn’t arbitrary either. The regulations require at least 90 days’ notice in the Federal Register, and 90 days from the Oct. 8 publication lands on Jan. 6.
Under the regulations the notice cites, the new rate also gets posted on SAM.gov’s wage determinations page and written into Davis-Bacon and Service Contract Act wage determinations. The division says an updated poster will be available on its website.
On most building trades classifications this floor won’t change a paycheck, because the prevailing rate on the wage determination is already well above $14.05. It matters where a determination lists a laborer or helper classification below it, which still happens in some rural counties working from old survey data. Those are the lines to check on any covered job, along with service subcontracts for work like janitorial or security that ride on the same prime contract.
Three steps cover it. Pull the award date and option history on every active federal contract. Flag the ones inside the 2015-to-2022 window that haven’t been extended. Then set payroll to pay at least $14.05 for hours worked on them from Jan. 6.
It’s a quiet fall for federal wage rules otherwise. The department recently kept its construction overtime coverage bulletins on the books, and HUD left its Section 3 labor-hour benchmarks unchanged.
The first rate under this order was $10.10 in 2015. Twelve years later it’s $14.05, and it applies to a set of contracts that can’t grow.