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Today’s numbers

Friday, Feb 21, 2014

* Kurt Erickson has a story about the cost for Illinois universities of raising the minimum wage to $10 an hour

At Southern Illinois University, for example, President Glenn Poshard said an increase could cost his institution $3.2 million in additional wages at a time when the General Assembly may be considering further cuts in aid to higher education.

“We need an increase in funding in higher education,” Poshard told members of a House appropriations panel Thursday. “We don’t have any extra to run our university.” […]

Illinois State University officials say the change could affect nearly 4,200 student workers currently earning the minimum wage at jobs ranging from campus food services to the student recreation center.

In all, the cost at ISU of an increase would be about $1.6 million, officials said.

Eastern Illinois University predicts an increase will cost about $940,000. And, because the university has committed to no tuition increase next year, a minimum wage hike likely would trigger a reduction in the number of student workers, said Derek Markley, chief of staff to President Bill Perry.

By the way, Senate minimum wage hike sponsor Kimberly Lightford told Kurt she’s at least two votes shy of passing the bill in the Senate. The real test, though, will be in the House.

- Posted by Rich Miller        


26 Comments
  1. - Ray del Camino - Friday, Feb 21, 14 @ 10:58 am:

    How about carving out an exception for student workers at public universities?


  2. - CicrcularFiringSquad - Friday, Feb 21, 14 @ 11:00 am:

    How about a 10% reduction in deputy chancellors?
    That should free up some cash for the raises


  3. - Formerly Known As... - Friday, Feb 21, 14 @ 11:02 am:

    If it’s $3.2 million at SIU, that’s about $6 million or more at U of I.

    Illini fans, rejoice. This is finally the excuse you need to simply cut the football program and end the suffering, lol.


  4. - RonOglesby - Friday, Feb 21, 14 @ 11:04 am:

    “How about carving out an exception for student workers at public universities?”

    Good idea at first blush, but then you ask why are student workers so cheap? well because they have very little skills and work part time…

    But there are plenty of those in the work force so wouldn’t that apply to every organization not just universities with Students?

    Whats good for the goose and all of that. It shoes how it increases costs, which in turn increase the price of anything produced by those folks.


  5. - Yellow Dog Democrat - Friday, Feb 21, 14 @ 11:17 am:

    If wages for student workers go up, won’t financial aid costs go down?

    Campus bars, on the other hand, will take a hit.


  6. - Quiet Sage - Friday, Feb 21, 14 @ 11:23 am:

    During the past 20 years, tuition increases at public universities have far exceeded the rate of inflation. http://trends.collegeboard.org/college-pricing/figures-tables/average-rates-growth-tuition-and-fees-over-time
    For the 2014-2015 school year, the in-state tuition for science and engineering majors at the U. of Illinois Champaign-Urbana will exceed $17,000. This does not include other fees or the costs of room and board.
    http://registrar.illinois.edu/financial/tuition_1415/AY/ugrad_engineering.html
    The minimum wage level, which has not kept pace with inflation, has little or nothing to do with these tuition hikes. Reductions in State aid may account for a portion of the increases, but there is certainly much more involved. Our young people should not be saddled with such exorbitant tuition bills. The full reasons for the tuition increases need to be made public. The General Assembly should launch a full-scale investigation.


  7. - A guy... - Friday, Feb 21, 14 @ 11:32 am:

    Minimum wage jobs are already very hard to come by at or near college campuses. Reality is, this bill would make these jobs more scarce. Same with everywhere else. Unintended consequence is less jobs. Not a winner


  8. - Ahoy! - Friday, Feb 21, 14 @ 11:33 am:

    Park Districts will be a big looser in this as well.

    Yellow Dog Democrat, financial aid costs won’t go down because the hours worked will probably go down and there will be a neutral impact on wages with slower services and turnaround time. The Universities can’t just absorb the payroll hit, they would have to manage it by reducing hours or hiring.


  9. - Huh? - Friday, Feb 21, 14 @ 11:41 am:

    $3.2 million increase out of what size budget?


  10. - Walker - Friday, Feb 21, 14 @ 11:50 am:

    ===The universities just cannot absorb the payroll hit.===

    Made me laugh.

    You don’t hear that argument when they bid for some tenured faculty, and way overpay administrators.

    Agree with QuietSage above. The costs have spiraled out of control for twenty years, and that has nothing to do with minimum wage jobs.


  11. - Steve - Friday, Feb 21, 14 @ 11:51 am:

    This is funny stuff! What a great way to teach college students the laws of microeconomics : the demand for labor is a downward sloping curve.


  12. - Dirty Red - Friday, Feb 21, 14 @ 11:54 am:

    Higher ed costs go up six percent each year. Minimum wage does not.


  13. - Out Here In The Middle - Friday, Feb 21, 14 @ 11:57 am:

    ==How about carving out an exception for student workers at public universities?==

    Why not an exception for any worker who is claimed as a dependent on another person’s taxes?


  14. - Century Club - Friday, Feb 21, 14 @ 12:08 pm:

    Huh?–

    Looking at their website, SIU’s operating budget was $889 million in FY 2012, so this represents a 3 tenths of one percent impact on their budget. So, you know, ring the alarm bells.


  15. - wordslinger - Friday, Feb 21, 14 @ 12:21 pm:

    Yeah, the minimum wage is the reason tuition keeps going up. Geez, where do you get this stuff?

    –Minimum wage jobs are already very hard to come by at or near college campuses. Reality is, this bill would make these jobs more scarce. Same with everywhere else.–

    Yeah, that’s the agreed-upon talking point.

    The cost of labor does not necessarily impact the demand for labor. If you have goods or services in demand in the market, you have need for the labor. Nobody’s hiring out of the goodness of their hearts.

    And the cost of labor is just one of many factors in the cost of goods and services.


  16. - Steve - Friday, Feb 21, 14 @ 12:37 pm:

    wordslinger:

    The cost of labor isn’t the only cost that an employer has . But, at a university it’s the dominant cost. So, the demand for labor really is a downward sloping curve. What a way for students to learn real world economics!


  17. - waffle fries - Friday, Feb 21, 14 @ 12:41 pm:

    Similar concern for NFP contractors serving persons with disabilities, but these entities can’t cost shift or raise tuition.


  18. - wordslinger - Friday, Feb 21, 14 @ 12:44 pm:

    –What a way for students to learn real world economics?–

    How about that Illinois public university model? What with the IBHE, virtually every university with its own governing board and administration acting in an uncoordinated fashion, program redundancy upon redundancy competing for the same students and resources…..

    You mean those “real world economics?”


  19. - Big Muddy - Friday, Feb 21, 14 @ 1:29 pm:

    More buffoonery from Gov. Quinn that just shows how inept the man is. He is in the midst of a budget crisis and he is magnifying the problem by straining state university budgets by pushing for a min wage increase. Guess we have to wait a month to find out how he intends to pay for it now that he kicked his budget address down the road. Rome burns.


  20. - fed up - Friday, Feb 21, 14 @ 1:31 pm:

    the CBO has estimated up to 1 million jobs will be lost if this is passed nationwide, i agree with a higher minimum wage but their are problems associated with it.


  21. - unknown poster - Friday, Feb 21, 14 @ 1:49 pm:

    If the minimum wage is increased to $10 per hour what will happen to all those that currently make $10 per hour? Shouldn’t their wages go up accordingly to $11.75? Then what about those already making $11.75? In the end, it will be all of who will pay for this by paying even higher prices for goods and services including college tuition. To think employers will absorb this cost altruistically is naive. Once the market adjusts to higher wages with higher prices then what is really gained? I guess we will have to raise the minimum wage even higher.


  22. - Yellow Dog Democrat - Friday, Feb 21, 14 @ 2:12 pm:

    @Ahoy!

    The universities cant have it both ways.

    Either it is going to cost them millions more or it aint.

    My guess is that it will. You can only reduce hours in a labor intensive operation like cafeterias so much.

    Student credit unions are another matter. All of those student cashiers can be replaced by atms.


  23. - unknown poster - Friday, Feb 21, 14 @ 2:23 pm:

    “You can only reduce hours in a labor intensive operation like cafeterias so much.”

    Exactly. The end result will be higher meal costs at student cafeterias to offset the increased costs to produce said meals.

    Sort of makes my point.


  24. - CapnCrunch - Friday, Feb 21, 14 @ 2:37 pm:

    “The cost of labor does not necessarily impact the demand for labor. If you have goods or services in demand in the market, you have need for the labor.”

    Except when you can replace it with capital. Remember when the clerk behind the counter poured your soft drink and put it on your tray? Now he hands you an empty cup and points to the self dispensing machine.


  25. - wordslinger - Friday, Feb 21, 14 @ 2:44 pm:

    – Now he hands you an empty cup and points to the self dispensing machine.–

    That’s not going to stop, regardless of a minimum wage.

    Although, there is a movement in retail for more service. Jewel is starting to pull out its self checkout machines in some markets. They’re losing people to the Whole Foods and Trader Joes.


  26. - Formerly Known As... - Friday, Feb 21, 14 @ 3:42 pm:

    === The cost of labor does not necessarily impact the demand for labor. ===

    But it DOES necessarily impact the

    1. Location of that labor (call centers in New Delhi or Newman?)

    2. Incentives for automating your workforce

    3. Number of new laborers you can hire to fill that demand.

    In the words of the Department of Labor on this very subject earlier this month, “The researchers find that increasing the minimum wage does not lead to a reduction in the level of employment; however, increasing the minimum wage results in a substantial drop in the rate of job creation. They determine that the decline in job growth is the result of expanding establishments decreasing the number of jobs they create rather than resulting from additional job losses among declining industries.”

    Raising the minimum wage may not result in a wave of layoffs, but it would absolutely harm and reduce job growth.

    For a state that’s already suffering from poor job growth and projected to finish near the bottom in 2014, the timing isn’t right to make this move.


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