If a State of the Union proposal becomes law, low-wage workers may see income increases, and Penn work-study students may feel their wallets fatten in the coming months.
“We know our economy is stronger when we reward an honest day’s work with honest wages,” President Barack Obama said in the address. “But today, … even with the tax relief we put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong.”
He called on Congress to increase the federal minimum wage to $9 an hour and to peg the minimum wage to cost of living increases, citing the issue as one of the few he and 2012 Republican presidential candidate Mitt Romney agreed on. The last federal minimum wage raise came in 2009, when it was bumped up to $7.25 an hour.
The main concern with an increase in minimum wage is that employers will hire fewer employees to compensate for the increased price of labor. While the empirical data on the effect of minimum wage increases is controversial, “most economists agree that theoretical models say there would be an employment effect,” economics professor Petra Todd said.
Work-study jobs could be heavily affected by a minimum wage increase. According to a Daily Pennsylvanian analysis of work-study job postings on the Student Employment Office website, all 94 jobs requiring “basic” or “entry-level” skills pay below $9 an hour. These positions, which range from research assistantships to WXPN programming internships, would see a pay increase should Congress approve Obama’s proposal.
A much smaller portion — just 39 of 399 — of jobs requiring “advanced” or “highly developed” skills pay below the proposed wage floor.
Although students stand to benefit during the school year, the effect on summer employment is more ambiguous, especially if employers decide to hire fewer workers.
“I think the people who mainly lose out are college students looking for summer jobs,” Todd said.
However, Director of Career Services Patricia Rose said Penn students would be sheltered from the brunt of any effect on summer employment.
“We don’t believe a minimum wage increase will have any effect on students’ summer employment,” she said in an email. She noted that while Career Services has not collected comprehensive data on summer employment, the most recent statistics for College of Arts and Sciences students showed that average summer pay was well above minimum wage. Even rising sophomores who worked full-time made an average of $11.10 an hour, assuming a 40-hour workweek.
While students may have something to gain, Penn employees would go unaffected by the measure.
“Penn is consistently paying hourly wages to its full-time employees higher than the federal minimum wage,” Executive Vice President Craig Carnaroli said in an email. “The last time Penn’s minimum hourly rate was $9 was 11 years ago in 2002,” he added, noting that Penn’s current minimum wage is $11 an hour.
Officials from the union representing Penn dining workers and library staffers did not return requests for comment. However, College junior Penny Jennewein of the Student Labor Action Project — which has focused on the jobs of food-service employees — said she thought unionized groups already made above minimum wage.
Whether Congress has the political will to increase the minimum wage remains to be seen. While there is some bipartisan support for the measure, it probably will not be a top priority for the Obama administration, political science professor Rogers Smith said. If there ends up being significant support for the measure, “they’ll put high on the [priority] list,” Smith added. “If not, they’ll probably pursue the path of least resistance with something else.”
The proposal is one step towards advancing a vision Obama laid out in his second inaugural address that emphasized socioeconomic opportunity and racial equality.
“He wants to put forth a strong, across-the-board progressive agenda in his last period of real national power,” Smith said. “[But] it is politically very difficult to support measures specifically designed to address poverty, specifically designed to address racial inequality.”
A minimum wage increase “is the biggest thing he could do politically to include those sort of equity concerns,” Smith added.