President Joe Biden was dealt a blow by a Texas federal judge this week, as his plan to increase the minimum wage for government contractors to $15 per hour.
U.S. District Judge Drew Tipton ruled on Tuesday that Biden didn’t have the power to order contractors to pay their workers that wage. His ruling blocked Biden’s plan from going into effect in three different states.
In making the ruling, Tipton said that the executive order that Biden issued in 2021 could potentially affect millions of workers, and as a result, it has “vast economic and political significance.” As such, Congress is the only government body that holds the power to pass the law.
Tipton’s ruling blocked the higher minimum wage from going into effect in Mississippi, Louisiana and Texas. Those three states filed a suit last year that challenged Biden’s executive order. They filed it because state agencies are often in receipt of federal contracts.
The Biden administration will have seven days to formally appeal that decision.
Tipton based part of his ruling on the “major questions doctrine.” The Supreme Court has used this judicial approach to invalidate some of Biden’s other major policies, including his student debt forgiveness plan.
The theory behind it is that the policies lack “clear congressional authorization.”
In addition, Tipton ruled that Biden was working around the Procurement Act, a federal law that governs how federal agencies must purchase services and goods.
The minimum wage increase was one of Biden’s first executive orders since entering the White House in 2021 that focused on labor. Every year, the federal government allocates hundreds of billions for contracts with state agencies, non-profit organizations and private businesses.
Federal law right now states that the minimum wage is only $7.25 per hour. Many states, though, have higher minimum wages. In fact, several cities and four states have a minimum wage set at the $15-per-hour level that Biden was seeking here.
Last year, the White House said that more 327,300 employees who work for federal contactors receive a wage that’s less than $15 per hour. The Biden administration also estimated that by raising the minimum wage to that amount, employers would face $17 billion in additional costs over the next 10 years.
For their part, the Biden administration was arguing that the president has broad powers under the Procurement Act to institute policies that would foster a contracting system that’s efficient.
The judge, though, said that the president’s power only extended to supervising how goods are bought and sold. He further ruled that Congress is the only body that could set a minimum wage or adopt certain employment policies, in lieu of them specifically granting such powers to a federal agency.
Following the ruling, a spokesperson for Republican Mississippi Attorney General Lynn Fitch said:
“We are pleased the court reached the same conclusion we did, that Congress has not given the Biden administration authority to enact this burden on an already faltering economy (through) executive fiat.”