Minimum wage increase

The future of many college students after the minimum wage rises may include
flipping burgers instead of going to class, according to some economists.
On Feb. 1, the Senate widely approved the vote to up the current minimum wage from $5.15 to $7.25 an hour. The Federal minimum wage increase, if signed by President George Bush, will be the first increase since most current college students were in elementary and middle school.
“Students are less likely to go to college as minimum wage rises because the opportunity cost of going to college is higher,” Dr. Christopher Clark, assistant professor of Economics at GCSU said.
“So basically, you can earn more money staying at home and working for a minimum wage job because the salary is higher. Students are less likely to continue on through college because of the decrease in the human capital accumulation.”
The policy study, The Economic Effects of Minimum Wages, says that for every 10 percent increase in the minimum wage, employment of teenagers falls by 1 percent to 2 percent. A higher minimum wage also increased the probability that a teenager would leave school to look for a job.
“The higher-skilled of the low-skilled workers, like college students, are more likely to keep their minimum wage jobs, while the lowest of the low-skilled workers are going to lose theirs or never even get one,” Clark said.
High school dropouts or those living on welfare, who often need jobs to support their families, are going to face more difficulties as wages rise and fewer jobs are available for their skill level.
“What’s ignored is that a lot of people that work in a low skilled labor market are coming from middle class and upper class because they are third wage earners, like teenagers and college students,” Clark said.
According to Contemporary Labor Economics, 40 percent of workers who are earning minimum wage are teenagers.
Whittni Wright is a minimum wage earner and a student at GCSU.
“If the minimum wage rises it would probably give me more of an incentive to
take a semester or two off of college so I can make more money to save up,” Wright said. “I have to pay for all of my own stuff because I don’t have the financial support from my family like other kids do. I just hope I have the drive later to keep going with school.”
Another GCSU student, Chris Thompson, is a pizza delivery driver for Domino‘s Pizza.
“I think a minimum wage increase will definitely have its short-term benefits,” Thompson said. “I’m 20 years old. If I¹m going to have more money to go to Wal-Mart and buy the stuff I want, I am. College students are going to enjoy the minimum wage increase, but I think the people who lose their jobs because of it are the people that the increase was supposed to help anyways, not us.”

Posted by Colonnade Archives on Mar 2 2007. Filed under News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry