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Picking up Shifts: How the 2021 Minimum Wage Hike Affects Student Workers

Last spring, Haverford College increased the minimum wage at Haverford to $10.50, from $9 (which had been in place since 2008). Almost a year later, we can observe how that raise has impacted student workers. There are two kinds of student workers on campus: those on federal work-study (FWS) and those not. To know the impact on student workers, we must understand how the FWS program typically works and how it works at Haverford. Then, we can compare how the minimum wage increase impacted FWS and non-FWS students.

FWS provides funding for colleges to employ student workers. However, according to the FWS website, “the federal share of FWS wages paid to a student may not exceed 75%.” Schools must provide at least 25% of a student’s total FWS wages from nonfederal sources. For example, if the federal government gives a school $60,000, the school must contribute at least $20,000 to FWS student wages.

At Haverford, the student employment budget exceeds the federal mandate. In 2019-20, the federal government gave the school $107,740 for work-study, per page 42 of the school’s 2020 990 tax form. Mike Colahan, the Director of Financial Aid, noted that the school contributed around $255,260 to federal work-study wages that year. This brings the total FWS student earnings to $363,000. The chart below compares the percentage that Haverford contributes to its FWS budget with the federal government’s minimum requirement.

The College also employs students who are not on FWS. Donna Hawkins, Director of Employee Relations, reported that the college hired 994 students in the 2019-20 academic year, and Colahan reported that there were around 291 FWS student workers. (Note: 291 is not how many students were awarded FWS, only the amount of students on FWS who worked.) As such, in the 2019-20 academic year, 29.3% of students were on FWS and 70.7% were not. 

Students are awarded FWS on their financial aid letter and choose whether to work and, to some extent, how much they work to cover their award amount. Sharon Bracilli, Associate Director of Financial Aid, phrases FWS as “a student earnings opportunity.” Bracilli states the FWS award amounts: “For a first year student, students can earn up to $2,200 and for an upper class student, students can earn up to $2,300 over the whole year.” 

Since the FWS award is an earnings opportunity, FWS students do not have to earn all or any of their award amount. In fact, Haverford’s Financial Aid office does not track FWS student earnings until the end of the academic year. If a student does not earn all of their FWS money one semester, their award will not change to reflect the decreased earnings the following semester. Colahan understands that “there can be reasons why students don’t want to work their whole amount. If you don’t work any of it, if you didn’t get a job, our office would assume that’s a decision that you needed to make. It is not seen as a reflection on that student’s financial need.”

Since the college employs more students than those on FWS, all the money not earned by a FWS student will still go to another student, regardless of whether they are on FWS. Colahan explained, “Whatever work-study aid is not earned by one student can be allocated to other students to ensure that the federal fund is expended.”

FWS students can also, in some circumstances, earn more than their award amount. Once FWS students have exhausted their FWS funds, they can continue to work, but the rest of the payment will come from the department’s budget since no more federal funds will be left. Typically, schools track FWS students paycheck to paycheck to ensure that they do not earn over their award. Still, since Haverford is fortunate enough to have a large student employment fund, students can continue working. For non-FWS students, there is no official earnings limit, though their earnings are indirectly limited by the college’s 20-hour cap for all student workers. 

In the 2020-21 academic year, the year of the wage change, the demand for labor (both FWS and non-FWS) remained the same. The typical response to a minimum wage raise is that the employer decreases hours offered since labor is now more costly. Typical FWS budgets would have reduced their hours offered if the student minimum wage increased and if federal FWS funding had not changed. However, hours remained the same at Haverford because the student employment budget increased. Hawkins shares, “Managers were not expected to decrease positions nor student work hours because of the wage increase.”

Though, student employment decreased following the wage change. Hawkins reported that the school hired 839 students last academic year, and Colahan reported that around 240 FWS students worked. This decrease could be, but is not necessarily, a result of the wage increase. “In 2020-21, some students were able to work remotely, but the number went down because we didn’t have campus events and in-person classes,” explains Hawkins.  

Under a normal minimum wage increase, the supply of labor increases since workers are willing to work more hours if they get paid more. Under the constraints of typical FWS (where there’s an earnings limit), workers would decrease their hours when wage increases since they would work fewer hours and make the same amount. However, after interviewing eight student workers on FWS at Haverford, they all noted that their hours stayed the same or increased following the wage increase. This means that their earnings increased, regardless of whether their hours increased or stayed the same. Since many FWS students at Haverford struggle to make their award amount, the wage increase may have allowed them to earn closer to that number. 

Because total hours worked remained unchanged and FWS students as a cohort worked more hours, the number of hours worked by non-FWS students must have decreased overall with the wage change, although some individual students may have worked the same hours. For non-FWS student workers who worked the same amount of hours, earnings increased, but for those whose hours decreased, earnings may have stayed the same or even decreased due to the wage change.

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