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Professor analyzes recent minimum wage legislation

May 8, 2014

While legislation was passed in Minnesota in support of a higher minimum wage in April, Wisconsin workers are not likely to see an increase in minimum wage any time soon, said Davida Alperin, professor of political science at UW-River Falls.

Minimum wage is a harsh reality for many college students who are struggling to support themselves, while paying for tuition to better their education and skills. About 24 percent of minimum wage earners are between the ages of 19 and 24, according to a national study published in 2013 by the Bureau of Labor Statistics.

President Obama proposed an increase in minimum wage of $10.10 in November. A number of states have followed Obama’s lead and approved an increased minimum wage. The legislation recently passed in Minnesota approved a higher minimum wage of $9.50 by 2016. However, Wisconsin still has a minimum wage of $7.25.

While Alperin is in favor of a minimum wage increase, she said she believes education should be made more accessible to all individuals, in order to create a more skilled labor force. She said the state of Wisconsin specifically needs to invest more into education by providing more funding for colleges and grants for students.

“We need to provide equal opportunities,” Alperin said. “I don’t think we do that.”

According to the Bureau of Labor Statistics study, 4.1 percent of high school graduates earn minimum wage. That percentage drops to 2.3 percent for those who have a bachelor’s degree.

Logan Kelly, a professor of economics at UWRF, said he believes systemic problems are to blame for economic inequality. Kelly said minimum wage is “treating the symptom, not the problem.” He said he believes the problem lies within the system, since a number of primary income earners do not have the skills necessary to provide for their families.

“Let’s re-look at training,” Kelly said. “We haven’t had a shakeup in education in a long time and it’s time.”

He said he thinks the model of receiving education, working and then retiring is outdated. Kelly believes workers should be periodically trained throughout their careers to allow them to compete in the job market.

“The four-year degree is the new eighth grade education,” Kelly said. “Not everyone wants or should have to go to college.”

In regards to actually increasing the minimum wage, both Kelly and Alperin said there are advantages and disadvantages.

“With every economic policy there are tradeoffs. Someone is harmed and someone is benefitted,” Kelly said.

Kelly said an important aspect to consider in regards to an increase is that there are several types of minimum wage earners. For example, a minimum wage worker could be a high school student or could be a mother supporting her children. He said he believes the problem is that many primary income earners in Wisconsin are trying to survive and support their families off minimum wage.

According to the Bureau of Labor Statistics, 45 percent of minimum wage earners in 2012 were over 25.

“People who are working should be able to earn enough to have basic necessities,” Alperin said.

Freshman David Heflin said he believes a higher minimum wage would be beneficial for those who cannot afford healthcare. However, he said he was concerned about the possibility of higher income taxes as a result of an increased minimum wage.

Another aspect to consider, said Kelly, is whether or not a minimum wage earner works for a small or large business. He said that an increase in minimum wage could lead to unemployment. For example, if the minimum wage was raised to $10 an hour, there will be some people who do not have the training and skill to make their work worth $10 and could become unemployed.

“Small businesses have less ability to absorb minimum wage changes. I’m less concerned about large businesses. However, small businesses may go out of business,” Kelly said.

Alperin also said one disadvantage of minimum wage is that some employers will have to cut positions because they cannot afford to pay higher salaries. While employers would have to pay their employees more, she said employers would be benefitted in the long run because a minimum wage increase could reduce turnover.

“If people are paid a better wage, they will want to stay longer,” Alperin said.

Alperin also said she believes an increase in minimum wage would support the economy, since minimum wage workers would have more money to spend. Taylor Burden, a freshman at UWRF, also said he supports a higher minimum wage because he believes an increase would stimulate the economy.

Another important point to consider, Kelly said, is the effect of minimum wage on price level and inflation. He said he believes a higher minimum wage should increase the real earnings of low-income workers.

To illustrate his point, a worker may get paid more to do their job, but the increase in wage may lead to inflation. In turn, this individual has to pay more for goods and services and is not actually able to earn more.

Senior Alie Leonhart said she is unsure of her stance on a minimum wage increase.

“I don’t know if it would help the economy or not,” Leonhart said. “The money has to come from somewhere so people would have to pay more.”

In regards to actual implementation of an increased minimum wage, Kelly said he would like to see a graduated system with different wages for minors and adults. However, this graduated system might lead to inequality in the job market among different age groups, he said. Alperin said she is opposed to a graduated system because it could lead to an “us against them mentality.

Alperin also said that there is a stereotype among minimum wage earners that they are not hard-working. However, she said that the economy will always include lower and higher earning jobs, no matter how hard-working an individual is.

“I think there are a lot of hard-working individuals who are not getting an adequate salary” Alperin said.