Wage increase could hit SIU’s wallet

By Karsten Burgstahler

The federal minimum wage could be raised to $10.10 an hour, but university officials are not sure where the money to support it at SIU will come from. 

During his State of the Union address and in the months following, President Barack Obama has argued the wage, now $7.25, is not enough for citizens to live on. Gov. Pat Quinn has pushed for similar legislation in Illinois. But University President Glenn Poshard said the $3.2 million cost the university system would incur if the wage was increased — $2 million at SIU, $1.2 million at SIU-Edwardsville — comes at a time when funding for higher education is dwindling.

“It would be good to have a minimum wage increase, but that money’s got to come from somewhere else,” Poshard said. “If that somewhere else limits student services, takes away from the workforce and other repercussions that would result, is that going to be beneficial enough to the students? It’s a trade-off.”


While Poshard’s presidential term will end months before any legislation would take effect, his successor, Randy Dunn, could be dealt a crisis soon after taking the position if Quinn’s 5 percent personal tax and 7 percent corporate tax are allowed to expire and appropriations are cut.

“Just as I have had to face over the past several years, grappling with this thing, it appears at this point in time that, if those two tax rates go back to where they were three yeas ago, then there’s several things (Dunn) is going to be facing as president to try to continue to balance the budget,” Poshard said.

A request for comment from Vice Chancellor for Administration and Finance Kevin Bame was directed to Chancellor Rita Cheng, who said student employment presently costs the university $11 million. Each 1 percent increase in the minimum wage is approximately an added $1 million dollar expense, she said.

“Our minimum wage employees are students, and our challenge would be to implement the increase without decreasing student employment opportunities,” Cheng said.

Either the number of hours available or the number of students SIU is able to employ could be impacted, she said.

“Certainly either approach would be damaging to students who are working to pay for college, and their financial challenges would in turn challenge the university,” Cheng said.

Quinn has recommended flat funding for universities in fiscal year 2015, and while he did not address the minimum wage during his budget address, as it does not factor in to state appropriations, Paul Simon Public Policy Institute director David Yepsen said the added expenditures could be left to the university.


“It would be up to the university to make more cuts,” he said. “That will be part of the debate on the minimum wage, but when I say minimum wage isn’t a budget issue, I’m talking about at the state level.”

Cheng said she doubts the state would provide extra funds if wages went up — flat funding is the best the university was told to hope for.

“If we chose to prioritize student employment, then we would have to look for something else in our budget, and I have not identified where we would find $2 million in our budget,” she said.

Cheng said no students have approached her seeking an increase in minimum wage on campus.

In general, the minimum wage issue divides economists and politicians because of one main debate: how sensitive businesses are to wage increases, economics professor Kevin Sylwester said.

The margin of increase is also important, Sylwester said. Some politicians might argue the substantial $2.85 increase will push places to lay off.

“(These people would argue) they just can’t absorb the cost increases,” he said. “And (they also say) you and I, as consumers, will also see price increases at McDonald’s and other businesses that use a lot of minimum wage labor.”

Others may argue the margin is not large enough to force businesses’ hands. Even if the increase was not as much, for example $7.25 to $9, people who argue the increase is too high might be happy, but those who argue it is too little may not settle.

“If you believe the minimum wage won’t cost a lot of jobs, then there’s no reason to try to find that happy medium, because in some sense you can have your cake and eat it too,” Sylwester said.

Ultimately, well-intentioned economists can be on both sides of the argument, he said.

“It’s not necessarily the case of one side trying to dupe the other,” Sylwester said. “These are hard questions to answer.”

Karsten Burgstahler can be reached at [email protected]on Twitter @kburgstahler-DE or by phone at 536-3311 ext. 254.