Minimum wage increase to cost CMU $691,000 next year
Nearly 4,000 student employees at Central Michigan University will benefit from new legislation signed in May that increases the minimum wage to $9.25 an hour by 2018.
The wage increase will cost CMU $691,000 next year and will be paid out from CMU's departmental budgets, not from general university funding.
"What we did was looked at students who made less than the proposed minimum wage and looked at how many hours they were working," said Barrie Wilkes, vice president for Finance and Administrative Services. "We assume they'll be working as many hours next year. Some departments pay (student employees) more. They will see a bigger hit to their budgets."
The minimum wage increase was the result of a bipartisan compromise in Lansing when both the Michigan House and Senate voted in favor of increasing the state’s minimum wage from the current minimum of $7.40 an hour.
The change in wage will take place over a period of years in four steps. In September, the amount will be increased to $8.15 an hour. That rate will then jump again to $8.50 in 2016, $8.90 in 2017 and $9.25 in early 2018.
Wilkes said it's up to the departments to allocate the additional money needed to increase those wages.
"It's going to be a bigger bite out of their budget," he said.
Jon Goodwin, the manager for Student Employment Services said the university will employ about 5,400 students during the next academic year. The wage increase affects all departments, including bigger employers like campus dining, facilities management, the Student Activity Center and university athletics.
However, Goodwin said he doesn't believe it will affect the number of student jobs available on campus based on figures from the last minimum wage increase in 2007.
Work-Study students affected by the change
Students with work-study funding are also in a unique situation. They might end up working fewer hours in the long run to earn the work-study money they have been awarded.
Work-study allows students to earn a certain amount of money through jobs on campus. The program is offered through the Federal Student Aid program.
"(Students with work study) are going to use up those dollars quickly," Wilkes said.
Wilkes added that those students could stay employed using non-work-study funds after they’ve earned their work-study money. However, that will also be up to the department that the student is working for.
"It's not unusual that student will go on non-work-study dollars," he said. “It does vary by department, but this is work that still needs to be done, jobs that need to be filled.”