Campus Reform | What Biden’s minimum wage hike would mean for higher ed

What Biden’s minimum wage hike would mean for higher ed

Biden’s proposed COVID-19 relief bill proposes a $15 per hour minimum wage.

One recent study suggested that this move would decrease college enrollment.

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A hallmark of President Joe Biden’s economic stimulus plan is a $15 per hour minimum wage. A recent study suggested that this move would decrease American college enrollment.

Biden explained in a recent speech that his $1.9 trillion “American Rescue Plan” includes an “increase of the minimum wage to at least $15 an hour.” Biden added that “no one working 40 hours a week should still be below the poverty line.”

Three researchers — Lance Wescher and Anna Rannou of Covenant College, and Travis Hutchinson of Unum Group in Chattanooga, Tennessee — determined that minimum wage hikes lead to a net decrease in college enrollment.

The researchers noted that the effect of minimum wage increases on young Americans was recently thought to be ambiguous. Their 2018 study explained that on one hand, “an increase in the minimum wage would make human capital investment less attractive to potential students, likely lowering college enrollment.” On the other hand, “the demand for education could increase” as teenaged workers are replaced by “more skilled, experienced professionals.”

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The study examined data from the National Longitudinal Survey of Youth over a period in which every state saw an increase in its effective minimum wage. 

They found that there was a “significant decline” in the number of people enrolled in college and employed, which outweighed a “smaller but still significant increase” in the people who were not enrolled in college and employed. In other words, students transitioned from being in college while working toward not being in college while working.

“The consequences are not merely the possibility of lower employment levels among young potential workers, but also lower college attendance,” concluded the study. 

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The researchers noted that if this trend lowers overall human capital investment, “it may be more detrimental to the individual and the economy as a whole in the long run. Higher wages are attractive in the short run, but the trade off for human capital development through college education may cause long-term harm.”

The researchers also noted that the effect on college-aged Americans who were not employed was negligible.

Campus Reform reached out to the researchers and the Biden transition team for comment; this article will be updated accordingly.

Follow the author of this article on Twitter: @BenZeisloft