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Democrats introduced a bill last month to gradually raise the federal minimum wage to $15 per hour by 2024. The new House Democratic majority sees this as an attempt to live low-wage workers and boost the economy. and focus on policy priorities.
If implemented, this bill will significantly affect the lives of many college-aged students in the workforce, as workers under age 25 represent almost 50% of all minimum wage earners, according to the Bureau of Labor Statistics. With the challenge of covering tuition bills and many other new expenses that come with living independently, many college students struggle to keep up with a minimum wage salary. The wage increase would ease the pressure and lessen this burden placed on working students, some say.
Stacy Hickox, assistant professor at Michigan State Universitys School of Labor Relations, is one of the many in favor of the raise. With minimum wage frozen at $7.25 per hour since 2009, Hickox says that minimum wage is no longer enough for students to live off of, as inflation continues to rise.
Minimum wage just doesnt meet the criteria for a living wage anymore, Hickox says.
To compensate for low wages, many students are forced to cram many hours of work into their busy class schedules. Hickox supports the raise because the higher paychecks will serve as beneficial to students balancing work and school.
I hate to hear that students are working 30 hours per week and dont have time for class work and homework, yet they still arent making that much, Hickox says. So, yes, I think (the raise) is very important for students.
While raising the minimum wage would help the economy as consumers are able to spend more with their increased paychecks, many are concerned with the possible effects it will have on inflation and employment.
MSU sophomore Nick Moscone is pursuing a degree in mechanical engineering and is currently working a minimum-wage job. Despite the immediate benefits of extra income due to the raise, Moscone said that the bad outweighs the good due to increased inflation.
I know most students are broke, and yes, they will make more money, Moscone said. But, over time, I think this will cancel out as prices go up and inflation increases due to the raise.
The increase in federal minimum wage will force many local businesses to compensate for higher wage bills by raising prices and cutting expenses in other areas in order to maintain a corporate profit. According to the Bureau of Labor Statistics, raising the minimum wage to $15 would cause prices to rise an estimated 4.3 percent.
Because the goods and services offered by most companies will become more expensive, the raise may not be enough to propel a consumers purchasing power.
Raising the federal minimum wage may also pose a threat to the budgets of many businesses in rural areas in which their local economy may be unable to support it.
President and Chairman of the MSU College Republicans, Aleks Oslapas, says that raising the minimum wage is not an issue the federal government should be looking at due to the inability to take local conditions into account.
If you look at places a half mile outside of Lansing, or other rural areas, there are businesses that cant afford to pay people more than minimum wage, which is already probably pushing their budgets pretty high, Oslapas said. What works in New York City definitely wont work in Wyoming.
Whether the effects of the raise will be beneficial or detrimental is still up for debate due to the fact that our country has never seen an increase of this magnitude. The significance of the proposed increase means that past minimum wage research, though not lacking in quality, may not necessarily be a reliable tool for discovering the most accurate outcome.
Dale Belman is an author and professor in MSUs School of Human Resources and Labor Relations. In one of his published books, What Does the Minimum Wage Do? He reviews the empirical research on the effects of minimum wage and says it is a very successful aspect of public policy. However, Belman does not think the government should raise the federal minimum wage to $15 per hour.
Even raising the minimum wage to $15, it would barely make it over a living wage for most single adults, Belman said.
Many economists have a widespread agreement that the raise will have generally small effects on employment and a small effect on poverty levels. Most who support the proposal argue that it will still serve as beneficial for college-aged workers.
Money is a clear and guaranteed return to going to work and raising the minimum wage will further establish work as a good thing, said Steven Haider, a professor at Michigan State University Department of Economics. I think it would help students because the mindset behind the connection it establishes between work and pay is good.
The exact effects the raise will have on our local economy are subject to debate, however, insight from people like Haider and many other economists reminds us of the indisputable ways the raise will serve as beneficial to college students.
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