Minimum wage raised over Labor Day
The conclusion of Labor Day weekend filled not only American stomachs, but their wallets as well, as Michigan workers earning minimum wage will see their wages rise for the first time in six years.
Starting Monday, wages rose from $7.40 an hour to $8.15 an hour thanks to Senate Bill 0934, which gradually raises the minimum wage to $9.25 by 2018. Mount Pleasant workers, either student or local, will see the effects over the next four years.
Economics Professor Larry Brunner said these effects are not likely to be as positive as intended.
"You don't do it to benefit minimum wage workers because it doesn't," Brunner said. "The higher unemployment will more than counteract the pay raise. There is a trade-off for people who keep their jobs, but I think you can argue that the people who don't have jobs are worse off."
Brunner said businesses compensate for the raise in other ways, such as cutting back on fringe benefits for their employees. He speculated that there wouldn't be a "huge effect" on prices, but instead on the workers.
Brunner argued the real winners of raising minimum wage are those who already make more than it, their wages usually increase accordingly.
"There is question of the positives of raising the wage versus the normative situation," Brunner said. "(Some) believe it is the right thing to do to pay workers more, I think that as well but there is a way to do that; have economic growth."
He said the effects on Mount Pleasant's economy will be hard to judge.
Jon Goodwin, manager of Student Employment Services, said SES won’t have to make any adjustment to their operations to compensate for student workers’ increased pay. He added individual departments to deal with potentially negative impact on budgets, although he said he did not anticipate any major effect.
Goodwin said work study programs could be affected because students can earn their awards faster with a higher wage.
Work study jobs are available to students who have applied for and been granted a financial aid package that includes a Federal Work Study award, allowing them to work on campus and earn up to their awarded amount.
“If someone has an award of $2,400, what a department tries to do is set up the number of hours over the course of the year to earn that award,” Goodwin said. “When the minimum wage is $7.40 (an hour), obviously it takes more hours for students to work to earn that award than at $8.15.”
Students in work study are distributed among the various departments each year. Academic Affairs has 47.8 percent of the work study students.
Finance and administrative services is the next highest, accounting for 39.8 percent. Other notable departments are enrollment and student services, 5.6 percent, and the President’s Division, 5 percent.
Michigan is one of 13 states that have increased the minimum wage since 2013. Seattle is the most generous city; wages are set to reach $15 an hour in the next four years.
The increase will equal 25 percent more than $7.40, and the current wage is almost a dollar ahead of the $7.25 an hour federal standard.
The minimum wage for tipped employees will be $3.10, and will reach $3.52 by 2018.
The law does govern some demographics differently. A newly hired employee between 16 and 19 can make a $4.25 training wage for the first 90 days of employment.
The next increase is scheduled for Jan. 1, 2016.