Michigan’s new minimum wage is expected to have a negative effect on student employment, according to several state universities. So while tuition costs continue to climb beyond the rate of inflation, fewer students will be given the opportunity to responsibly pay their way through college.
Michigan passed a stepped minimum wage increase which will begin at $8.15 per hour on September 1, and continue to gradually rise until 2018 when it reaches $9.25 per hour in 2018, according to The Valley Vanguard, the student newspaper for Saginaw Valley State University.
As modest as these increases appear, the effect on universities is devastating, and is estimated to cost Saginaw Valley State approximately $760,000 annually by 2018. Something has to give in such circumstances, and in this case, it’s student employment.
“We recognize the importance of on-campus employment to our students both financially and as a means to develop necessary work skills that assist students in the early stages of starting a career,” Jim Muladore, Saginaw Valley’s executive vice president of administration and business affairs said, according to The Vanguard.
Notwithstanding student employment’s importance, Muladore said that the new minimum wage law will result in either fewer students being hired or decreased hours students may work.
Saginaw Valley isn’t alone. The minimum wage increase will affect some 4,000 student employees at Central Michigan University, and cost them an estimated $691,000 next year alone that will be paid out of CMU’s departmental budgets, according to CM Life, its student newspaper.
Adding fuel to the fire, the Obama administration’s expansion of the Pay As You Earn program is driving up the costs of earning a degree, putting fiscally responsible students further behind the 8-ball. According to a report by Hans Bader in this publication Wednesday:
The Pay As You Earn program limits borrowers’ monthly debt payments to 10 percent of their discretionary income. The balance of their loans is then forgiven after 20 years — or just 10 years, if the borrower works for the government or a nonprofit.
It will cost taxpayers a lot, while doing nothing for most student borrowers (who may experience tuition increases as a result), and it will favor imprudent borrowers over prudent borrowers.
“For every action, there is an equal and opposite reaction” is not only Newton’s third law of motion, but applies equally well to economics and politics. Politicians would do well to remember this. When they ignore this principle, it’s their own constituents who end up paying the bill.