Feb. 1, 2007

Minimum wage raise harmful to everyone
By Jason E. Weber
weberj@marietta.edu

College is a very expensive undertaking. Many people opt out of attending college because they do not feel they will be able to earn money and attend school at the same time, and almost everyone who attends college graduates in debt.

Work-study is the government’s way of helping to relieve that financial pressure by allowing the students to work for their college or university that offers a much more flexible work schedule.
In return, the college makes out in the deal by acquiring young individuals in the process of being educated who can do the campus’s busy work and be paid by the federal government instead of by the college like regular hourly employees are.

This past November, Ohio voters voted to increase the state’s minimum wage by over a dollar per hour. Unfortunately, the amount of work-study money provided by the government for student employees remains the same. The result is that students earn their money quicker.

On the surface, this seems like a steal for the student. Now they can work the maximum twenty hours a week, and earn their entire work-study award in one semester. But how does that effect the departments employing students? If all of their work-study students only work one semester, who will work in the spring?
The effects are detrimental to the college who has no control in the amount of money students can make in a year. The amount of man-hours available for each of the given departments is going to be inevitably cut, preventing the departments from continuing operations as usual.

For example, the Student Employment Office has simply cut their hours because they cannot afford to have their students work the same number of hours that they did last semester. What happens if CPS makes similar cuts? One of the regular officers will have to man the phones while the other is in the field because they can’t afford to have a student sit at the desk while they’re both on patrol. The functionality of the college depends on student workers.

Outside of the college, the effect on the economy is potentially much worse. While individual employees will be required by law to make more money, companies won’t want to take such a large hit. The natural response then would be for the companies to start cutting hours, or cutting employees.

For example, if Subway were employing all their employees at minimum wage, with the new increase they would have to pay them approximately $72 more per week. Assuming that there are about three employees working at a given time the store would have to find a way to sell about 200 more subs per week, a challenge that most store owners would balk at as they opted to let one of their sandwich artists go; and seriously, what other jobs are there for a sandwich artist?

It is unclear at this time how much this minimum wage hike will effect the economy. It is possible that the increase in funds available to citizens will increase their spending allowing for companies to make enough money to pay employees.

However, it also quite possible that it won’t, and it is almost certain that it won’t right away. This sharp increase is certain to force employers to make potentially rash decisions to protect their efficiency and their bottom line.