Home Money Opinion: Raising OU’s minimum wage unrealistic, harmful

Opinion: Raising OU’s minimum wage unrealistic, harmful

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In its first weeks in office, the current Student Senate demanded an increase in student wages. Senate proposed a $15 minimum wage, nearly double Ohio’s current $8.10 minimum wage. The minimum wage increase sparked debate, with proponents claiming it will reduce poverty, and, for students, make college tuition less daunting. However, economics is not that simple, and an increase in minimum wage proves to be more harmful to students in the long run.

Repeatedly, economists have found that increasing the minimum wage hinders hiring new workers and decreases the employment rate. With a wage so high, incoming students are less likely to find jobs, and the university will not be able to support a system that pays $15 wages to thousands of student workers. While a $15 wage may not have been the actual end result–Senate members claimed the high number was the starting point to begin negotiations–even increasing the wage a few dollars proves to be harmful. According to a study done by Dr. Richard Vedder, professor emeritus in OU’s economics department, “teenage unemployment rose sharply when the minimum wage was increased,” under the Clinton administration.  And that was only a 90 cent increase.

And it’s not only the university that a sharp increase in student wages hurts. Local businesses could hurt from the competition and could not afford to keep up with OU’s high wages. More and more local employees would be duking it out for high paying dining hall jobs, leaving stable jobs at bars and restaurants. Businesses would be forced to compete to the point of bankruptcy or struggle to find employees to settle for adequate wages. According to Gary Wagner, an economics professor at Old Dominion University, “If the minimum wage goes up, businesses will have to offset the financial hit by taking on more work themselves and ‘may be less able to invest in future job growth.’”

Right now $15 minimum wage exists in Seattle, a city whose cost of living ranks among Santa Ana and Manhattan suburbs. In fact, Forbes ranked it the twelfth most expensive city in the country. After only a few months of inflated minimum wage, employers are seeing negative effects, and more businesses than normal are closing. According to The Seattle Times and Forbes, restaurants have been forced to raise prices and “source poorer ingredients.” Washington Restaurant Association CEO Anthony Anton says, “it’s not a political problem; it’s a math problem.” Even for a large metro area like Seattle, keeping up with such high wages is not possible. For a smaller community such as Athens, the results could prove to be even more detrimental. Eventually businesses will close and unemployment rates will rise.

Recently many political figureheads and employer interest groups have done private research to support the idea that an increased wage decreases employment. In Ohio, Senator Rob Portman said “if we raise the minimum wage too high and too fast, you’ll have less employment…the reality is just over half the people on minimum wage are young people between 16 and 24. A lot of them are folks who need that work.” This certainly affects local businesses and their inability to keep college workers employed at such high rates. According to a 2014 study by Express Employment Professionals, 38 percent of the 1,213 employers surveyed responded they would lay off workers if a minimum wage increase is enacted.

Additionally, there is a reason minimum wage jobs pay minimum wage. Overall, they are unskilled jobs and composed of menial tasks. Brian Baugus, an assistant professor of economics at Regent University says, “[Raising the minimum wage] is a very poor way of addressing the issue. We’re not buying a person, we are hiring skills.” Raising the wages for minimum skill jobs pressures higher skilled employers to raise their wages, creating a wage increase cycle. As a result, regular salary workers and skilled workers are hurt in the long run. Not to mention, minimum wage workers do not actually benefit from the raise because higher wages inflate the price of goods. If minimum wage workers are suddenly earning a few more dollars per hour, the worth of goods decrease, so companies’ only option is to drive prices up to keep up with the dollar’s value. This does not particularly affect the cost of moderate to expensive goods, but it does change the price in lower-budget goods, such as fast food and coffee.

Lastly, student salaries come out of our own pockets. Increasing OU’s minimum wage is the same idea as Congress giving itself a raise. For 2015, the university (including our tuition dollars) will pay $16.3 million in student worker wages. Any subsidy of that cost is a state or federal subsidy (our tax dollars). And if any of you don’t pay taxes, then it comes from my tax dollars.

Increasing student minimum wages proves to be detrimental in the long run. Raising the wage too high hurts the university, local businesses and all wage and salary earners. A $15 per hour wage is unrealistic and economically irresponsible.

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