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PLNU affected by minimum wage increase

Student employees across campus will receive an hourly wage increase this year due to new legislation signed by Gov. Jerry Brown in September.

The Minimum Wage Order states that, effective July 1, the minimum wage in California will be raised from $8 per hour to $9 per hour. The last minimum wage raise occurred in 2008, previously set at $7.50 per hour.

“PLNU currently spends approximately $2.4 million each year on student wages,” said PLNU’s vice president for finance, George Latter, via email.

The next minimum wage raise will be an increase to $10.00 per hour effective January 2016.

“The increase in the minimum wage…will amount to a 25% increase or approximately $600,000 in potential increased cost to PLNU,” said Latter.

Latter said there are four options PLNU can explore: increase tuition, reduce the number of positions or hours student employees work, trim costs in other areas on campus, or a combination of all of these options.

“These are similar to the options all businesses who are impacted by the minimum wage increase will have,” said Latter. “We will be making this decision (at least with respect to the cost impact of the initial increase from $8 to $9) over the next 3-4 months as we prepare our 2014-15 operating budget.”

Lynn Reaser, chief economist for PLNU’s Fermanian Business & Economic Institute, said the minimum wage increase could lead to fewer jobs in the state.

“Unfortunately…it could hurt some of the very people it is trying to help, by boosting their standard of living,” said Reaser. “Because minimum wage is set above what the market basically is requiring, it means that there will be more people wanting to work than there are jobs available.”

Reaser said that instead, companies might automate or hire more experienced employees. She suggested the problem of fewer available jobs also hurts those looking to find their first ever jobs, something that applies to many students.

Reaser contends that, although social polices are often well intended, there can be unintended side effects.

“We certainly want to help raise the standard of living,” said Reaser. “But the best way to do that, actually, is not by a mandate — artificially requiring companies to pay a higher wage, but to actually help individuals secure the education and the training and the knowledge so that their productivity, their contribution, actually warrants a higher wage in the marketplace.”

Reaser predicts the funds for this increase will be absorbed by taxpayers and companies raising prices for consumers.

Over the last 12 years, Jamie Gates, professor of Sociology and director for the Center for Justice and Reconciliation, said he has listened to various workers in San Diego who depend on their minimum wage salaries. Gates said minimum wage workers will benefit from the raise.

“[P]rofits for owners/shareholders and low prices for consumers should not be built on the backs of our lowest paid workers; tens of millions of minimum wage workers are trapped in poverty, unable to afford the cost of living on full time work,” said Gates, via email.

Gates notes that the United States is behind other global economies when it comes to minimum wage, and points to a failure to keep up with inflation as a good reason for increasing the minimum wage.

“[M]inimum wages disproportionately impact the survival of minority communities,” said Gates. “[O]rdinary tax payers would save billions on…social programs that current minimum wage earners are driven to if companies were committed to a living wage; low wage workers disproportionately spend increased wages immediately and locally, pouring the rise in wages directly back into the local economy, strengthening local businesses and increasing local employment.”

Reaser, on the other hand, providing workers with skills will allow them to gain better jobs.

“[I]n the long term, workers, employees will earn the value of their production,” said Reaser. “So if they’re more valuable then they warrant a higher salary in wage in the marketplace. If they’re less skilled, they don’t earn as much. That’s why wages are as high or low as they are.”

Reaser refers to the cycle of students’ needing experience on their resume in order to get a job, and needing a job to get experience, as a catch-22.

“So you have to break into that cycle, and often it’s through the summer job — the first job…but if you can’t even get that break, it’s very hard.”

Alternatively, Gates said the additional costs PLNU will face does not outweigh the advantages of the minimum wage increase.

“I might recommend they slow down the rise in faculty and administrator wages to absorb the cost,” said Gates. “But the impact on our university pales in comparison to the benefit to working families all over the state.”

The Offices of Strengths and Vocation is currently adapting the schedule for student pay for the July 1 minimum wage increase. Latter said the students who are already receiving more than minimum wage will also receive a pay increase.

 

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