Sunday, July 6, 2014

Incentives Matter! Two Universities in Michigan to Reduce Student Employment

Why? Because of increases in labor costs due to Michigan's implementation of a higher minimum wage.  Well, yeah.  It's a completely determined, universally accepted fact by honest economists that minimum wage laws increase unemployment and/or reduce hours worked by the very group they're supposedly intended to help.  When you increase the cost of labor, you incentivize employers to find ways to reduce their overall labor costs.  Hence, less employment for those who need it most.  Here's an excerpt from an article at Campus Reform:
However, Saginaw Valley State University is not the only Michigan university amending their budget.
Central Michigan University (CMU), the fifth largest university in the state, is preparing departments for a $691,000 wage increase for the anticipated 5,400 student hires.
The Workforce Opportunity Wage Act, signed into law by Governor Rick Snyder (R), ties minimum wage to inflation, mandating an increase from $8.15 on September 1, 2014, to $9.25 per hour come January 1, 2018.
And for more on the topic of minimum wage in general, try here and here.