The living wage is a controversial issue on many college campuses. Strikes, sit-ins, and fasts have plagued the University of Miami, University of Vermont, and Georgetown University, among others. Student activists are demanding that their colleges raise minimum compensation for full-time employees so that they can afford what students perceive as a dignified living. These students overlook the detrimental consequences attached to living wage mandates, which can hurt the very people they are trying to help.
Unintended Consequences:
- Like federal and state minimum wage laws, the living wage serves as an employment tax. Once it has been implemented, employers must bear the burden of paying higher wages.
- This can result in layoffs and frictional unemployment. Hence, these employment costs can reduce opportunities for the very workers activists are trying to help.
- Living wage mandates discourage employers from hiring prospective low-skilled employees. If a University raises its wages per hour from $9 to $11 it will draw a more skilled workforce. The people who could have obtained employment at $9 are now displaced by workers with better skills. The reduction means fewer entry-level, skill-building opportunities for the workers who require them the most.
High Costs of Living Wages:
- In 1996, when the city of Chicago considered a living wage ordinance to require a 79% increase in the wages of contracted government workers and firms in the city, a study conducted by the Employment Policies Institute revealed that:
- The ordinance would have cost the city approximately $20 million per year.
- Labor costs to the firms would have increased by $37.5 million and the city faced a loss of at least 1,300 jobs.
- The living wage ordinance would have led to a pay increase for approx. 8,470 workers, a small portion of the workforce compared to the costs of millions endured by taxpayers.
- Similarly, student activists argue that college endowments should provide for the extra expense. However, endowment contributions go towards specific projects, usually pertaining to student needs. Academic institutions have to adhere to the guidelines set by their donors and monetary sources on how to use funds.
Universities have failed to provide a rational discussion about the pros and cons of living wage ordinances. This leaves student protestors with good intentions but incomplete information. Students must realize that increased regulations are not the best ways to help campus workers and staff, and can end up harming their intended beneficiaries.
All facts taken from Waging Blame, a publication by the Independent Women's Forum, available at iwf.org & Employment Policies Institute at epionline.org.