Student wallets might soon feel a bit heavier. That’s because the U.S. Senate and House of Representatives recently passed a minimum wage increase. If signed into law, it will raise the minimum wage from $5.15 to $7.25 an hour over a two-year period.
What will be the effect on students? A quick glance at the U’s job postings shows that a number of campus jobs pay fewer than $7.25 an hour. Currently there are openings for a box office assistant at Pioneer Memorial Theatre for $6 an hour, a cashier at Commuter Services for $6.95 and an usher at the Huntsman Center for $6, just to name a few.
My first campus job paid a meager $6 an hour. I knew I could get a better-paying job elsewhere, but I chose to take the campus job instead. Now, the U will be required to pay students a little more.
Based on data provided by the Congressional Research Service, it appears that U students are not alone in receiving substandard wages. Of those earning fewer than $7.25 an hour, 24.7 percent are between the ages of 20 and 24–that’s 2.68 million individuals, many of whom are likely to be students.
Raising the minimum wage will certainly help students keep up with constant tuition increases, but what other effects will it have?
The conventional wisdom of many economists is that raising the minimum wage will increase unemployment. They argue that companies will be unable to employ as many workers at the higher wage level and will be forced to let some go or cut back on the number of new people they hire. Some even argue that a higher wage rate will encourage students to drop out of school and work instead.
These arguments would seem plausible if the minimum wage rate were above the equilibrium (market) rate. Today, however, few companies can attract workers at a wage below $7.25. And according to the American Economic Association, fewer than 50 percent of economists now believe that raising the minimum wage actually increases unemployment. Recent studies by economists Alan Krueger and David Card show little connection between unemployment and minimum wage increases.
If anything, this law will force tightwad employers–like the U–to pay a competitive wage, or at least something closer to the market rate. The university currently has more than 700 job openings, many of which probably remain unfilled because they pay so little.
The last minimum wage increase occurred in 1997, and since that time its value has been eroded by inflation and, for students, continual tuition hikes.
Raising the minimum wage will help more students afford college and let current students work less and focus more on their studies.
As the Congressional Research Service points out, one in four workers between the ages of 20 and 24 could expect a raise if this measure passes through Congress and is approved by the president. For many students, this could make all the difference.
