President Joe Biden signed an executive order on Tuesday that will raise the minimum wage for federal contractors and subcontractors to $15 an hour.

The order stipulates the minimum wage will be $15 an hour beginning Jan. 30, 2022, and agencies must implement the measure by March 30, 2022. The minimum wage will be adjusted automatically for inflation every year after 2022.

“Raising the minimum wage enhances worker productivity and generates higher-quality work by boosting workers’ health, morale, and effort; reducing absenteeism and turnover; and lowering supervisory and training costs,” Biden said in the order.

The current minimum wage for federal agencies is $10.95 an hour, which was raised in 2015 by an executive order from President Barack Obama.

According to a study from the Congressional Budget Office, raising the minimum wage will cause higher prices for goods and services and cause employment to drop by 1.4 million workers from 2021 to 2025, but would bring nearly 1 million people out of poverty over the next four years. White House economists believe the increase is unlikely to cost taxpayers more money, saying it will lead to more productivity and less turnover.

The changes made by the executive order will apply to any new contract, solicitation, extension or renewal of an existing contract.