The federal minimum wage for workers on older government contracts goes up to $14.05 an hour on January 6, 2027. The Labor Department announced the new rate on October 8, and it is $0.40 more than the $13.65 now in effect. The higher $17.75 floor that once covered newer federal contracts is gone, because President Trump revoked the order behind it in March 2025.

The $14.05 rate and the tipped wage

The Labor Department’s Wage and Hour Division published the rate notice in the Federal Register. It says the new Executive Order 13658 rates “shall take effect on January 6, 2027.” The $13.65 rate has applied since May 11, 2026.

Workers who get tips are covered by a lower cash wage. On the covered contracts it goes to $9.85 an hour from $9.55, and tips must make up the difference to $14.05. The notice says the increase follows the annual rise in the consumer price index for urban wage earners and clerical workers, known as CPI-W, which it puts at 3.075 percent. The tipped wage is set at 70 percent of the full minimum.

Which contracts are covered

The department’s government-contracts page says the rate applies to workers on federal contracts under the Davis-Bacon Act and the Service Contract Act that were awarded between January 1, 2015, and January 29, 2022, and not renewed or extended on or after January 30, 2022. It adds that seasonal recreational service contracts are not covered.

That date range is the whole story for most workers. Someone cleaning, guarding or cooking under a federal contract signed in 2019 and never renewed is covered. Someone under a contract awarded or renewed in 2023 is outside this rate. The notice does not say how many workers are covered.

January 6, 2027 is the next date on this wage floor, and it catches workers on federal contracts awarded before 2022.

Get the deadline alerts before they pass →

What happened to the $17.75 floor

A second order, Executive Order 14026, set a higher minimum for contracts entered into on or after January 30, 2022. It started at $15.00. A Federal Register notice from 2024 put it at $17.75 an hour on January 1, 2025, the last rate set before the order was revoked.

On March 14, 2025, President Trump revoked Executive Order 14026 in section 2(d) of Executive Order 14236. The Labor Department says it is no longer enforcing the order or its rule, which sits at 29 CFR part 23, and that it plans to rescind that rule. Its government-contracts page names no minimum wage for contracts awarded after January 30, 2022, so those workers no longer have the $17.75 figure to point to.

Why the old order is still around

Executive Order 13658 dates to 2014, and contractors must pay no less than the minimum in effect during each year of the work. Executive Order 14236 did not mention it, and that left a question about whether it still applied. In a February 2026 Federal Register notice signed by Wage and Hour Administrator Andrew B. Rogers, the department said Executive Order 13658 “remains in effect” for contracts in the 2015-to-January 2022 range. That notice set the $13.65 rate. An employment-law firm’s analysis of that notice pointed out that the department gave no reasoning for reading the order that way.

The same analysis says many covered workers are also under the Service Contract Act or Davis-Bacon Act prevailing wages, which are usually higher. In those cases the $14.05 floor is not what shows up on a pay stub. It matters most where those two laws do not set a higher rate.

The yearly adjustment follows the same method each time. For the $13.65 rate announced in February, the department compared average CPI-W for July 2024 through June 2025 with the year before, found a 2.490 percent rise, and applied it to the previous $13.30 rate. The result rounded to $13.65. In short, the rate for these older contracts moves with consumer prices, one step a year, and the October notice is the next step.

Checking which contract rate applies

The first thing to find out is when the contract was awarded and whether it has been renewed or extended since January 29, 2022. An employer’s human resources office or the contract itself should show both dates. A pay stub that shows an hourly rate below $13.65 today on a covered contract is worth raising with the employer.

The free route for questions is the Wage and Hour Division’s government-contracts page, which lists the current rates and the coverage rules.

Tipped workers should compare two numbers: the cash wage of $9.85 starting January 6, and the total with tips, which has to reach $14.05. Keeping a simple log of hours and tips for the first pay periods of 2027 makes any gap easy to show.

More Financial Reading

• 24 Ways to Stretch a $2,087 Social Security Check
• 17 Places to Find Your Share of the $4.25 Billion States Give Back
• 16 Steps to Stop the Scams That Took $7.7 Billion From Seniors

This article was produced with AI assistance and edited for accuracy against the sources linked above.