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Contributed by: Admin 2

Government Vendors Under the Pressure of Rigid Requirements

The Growing Challenge of Finding and Retaining Valuable Talent

Contributed by David Bishop, Client Relations Executive

The U.S. Department of Labor announced that government contractors would be required to pay employees at least $15 an hour in all new contracts beginning on Jan. 30, 2022 [1]. On the one hand, the government contracting industry is growing with more opportunities as the government releases increased contract awards, but the industry however is also becoming increasingly competitive as a result of the pressure from government agencies to increase worker pay.

In order to remain competitive, government vendors greatly depend on skilled talent to drive growth and success. As a result, the current job market and pressure from the wage mandate make it challenging to secure and retain workers who are both, qualified and skilled to take on the required tasks. Resuming operations after the pandemic-driven lockdowns have brought increase in various costs including packaging, raw materials, shipping, among others. In addition to the operational costs, government vendors are also facing the rise in workers’ wages.

“If you are seeing these pressures in an environment where the economy was weaker, this would be a disaster, but we’re not. We’re seeing it in an environment where companies have massive pricing power, which means they can pass it on.” – Jonathan Golub, chief U.S. equity strategist at Credit Suisse [2]

Despite the wage hike and its impact on profitability, government vendors can strive to remain competitive in the industry through raising the wages they offer. They should first assess the talent requirements that they have established and ensure that they are aiming at the right fit for their business. Since it is likely for most candidates to be working elsewhere already due to the low unemployment rate, increasing the wages will increase the likelihood of acquiring the desired candidates.


[1] CNBC: Minimum wage for workers on new federal contracts will rise

[2] CNBC: Workers’ wages are rising at the fastest pace in years