Illinois Governor Pat Quinn suggested an increase in minimum wage in his State of the State address last week from the current $8.25 minimum wage to a $10 an hour minimum wage rate over the next four years. A week later, President Barack Obama, in his State of the Union Address, called for a federal minimum wage increase to $9 an hour. Working students may soon find a heftier wad of cash in their pockets, but is it too good to be true?
In the address, Quinn said, “Nobody in Illinois should work 40 hours a week and live in poverty … That’s why, over the next four years, we must raise the minimum wage to at least $10 an hour.” Quinn did not provide a detailed plan of action toward achieving this goal.
Raise Illinois, a campaign focused on raising the minimum wage in Illinois, said a raise in the minimum wage “will increase consumer spending and create a higher demand for goods. This in turn will increase business profits, create jobs and assist in the overall economic recovery.”
An article published by the Economic Policy Institute said raising the minimum wage “puts more money in the pockets of working families when they need it most and, in turn, augments their spending power in the local economy.”
Michael Miller, a DePaul professor of economics, believes a minimum wage increase may likely pass through the democratically-dominated Illinois House and Senate. If it does, Illinois residents will have to “suffer the consequences.”
According to Miller, a mandate by the state to increase minimum wage would leave Illinois businesses no choice but to increase prices for the consumer, decrease staff, or move out of the state to accommodate the wage increase. Raising minimum wage also makes it more difficult for low-skilled workers to find work because businesses cannot afford to hire employees who create less value than they earn.
“The people who create the new jobs are the people creating new businesses. The research on that is perfectly clear,” said Miller. “Anything that makes it harder for businesses to start businesses makes it harder for Illinois to have new jobs.” In his proposal for increased minimum wage, Quinn is trying to help the common man, but “what he’s ignoring are the consequences. When it comes to the minimum wage (increase) most of the consequences are negative. They are almost never positive … When you raise the minimum wage, unemployment will rise.”
President Obama also addressed raising minimum wage in his State of the Union Feb. 13. “Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line … in the wealthiest nation on Earth, no one who works full time should have to live in poverty – and raise the federal minimum wage to $9 an hour.”
So should the minimum wage be increased, students may find that on-campus jobs will deal out more dough.
DePaul employs more than 4,000 students with an average pay rate of about $10 per hour, depending on the level of pay grade of the job.
Erik Friedman, director of on-campus employment, believes if minimum wage in Illinois does increase to $10 an hour, “it’s not going to be a huge amount on DePaul. Those (wages) that are under (the $10 minimum wage) are going to have to come up, and those at $10 would already be at the wage, but we would probably do some adjustments based on the change.”
In years past, Illinois raised minimum wage in 25-cent increments and DePaul adjusted their pay grades accordingly. According to Friedman, after the wage increase, the university saw an increase in student employment. Should the new minimum wage proposal pass, Friedman suggests that departments would have to build the new wages into their budgets, but Friedman did not know a direct plan of action the university would take to generate the extra money.
Michael Hoppenrath, a political science and economics student, said, “The student in me who has lived off of Missouri minimum wage ($7.35 as of January 2013) is super excited (for a higher minimum wage in Illinois).” From an economics standpoint however, Hoppenrath is “skeptical of the effects of whether it will improve the situation (in Illinois).”
Short-term effects of increased minimum wage will significantly benefit students working on or off campus, but the long-term consequences remain under debate by economists and politicians.