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President Clinton signed the Minimum Wage Increase Act into law on August 20 with bipartisan support. The law phases in a 90-cent increase over the next 12 months. On Oct. 1, the minimum wage will increased 50 cents to $4.75 per hour and will increase aga in to $5.15 per hour on Sept. 1, 1997.
Attached to the bill is a provision that reinstates an expired, 18- year-old tax exemption that allows employees to receive tax-free tuition assistance from their employers. Additionally, if an employee is taking college courses to maintain or improve job skills, the tuition costs are tax deductible. Training for new jobs or courses taken to meet minimum requirements are not deductible. So, what does this all mean for college students?
Let's talk numbers - real, tangible dollars. It is certainly understandable that many students work to supplement their financial aid and pay for the higher education so desperately coveted by many. Loans, grants, scholarships and fee waivers are just not enough to cover the costs, or they are simply not available to many of us.
So we work to pay utility bills, rent, transportation costs, insurance, food bills, etc. Many of us work twenty to thirty hours a week. For those on minimum wage, a 90-cent increase means $900 to $1,350 dollars more in their pocket.
Real money. That means more groceries, more often. Utilities get paid in full and on time. The car gets fixed. That's money to buy a year-round bus pass, a better bike, or new shoes! How about money to buy dental insurance, more car insurance or a better place to live? Imagine the boost for single parents who work and go to school - better child care, food and clothing and better health care. In the end, peace of mind is what we purchase.
The tax-free tuition assistance provision will encourage employees to seek job training to improve their skills and contribute to better productivity. Employers want a work force that is well-trained and suited for an ever-changing economy. However, many employees were reluctant to participate in tuition-assistance programs because the employer contribution was considered taxable income which increased the employees' overall tax burden.
The reinstated provision removes that reluctance and frees the employee to take advantage of employer-operated educational programs. Thus, students who work to support a family or themselves can reduce the high costs of education, improve their job skills , increase productivity and, in the end, better their chances for job security and higher wages.
Students who work part time with a particular employer can continue after graduation and improve their job proficiency at the expense of the employer. The student, turned employee, receives a continuing education, steady wage increases and job security. T he employer gets a reliable, entry-level pool, familiar and trainable employees, increased productivity and higher profit margins. Everyone wins in the end.
The mantra of the nay-sayers insists that a minimum wage increase will drive employers to seek lower labor costs elsewhere. They say thousands of entry-level jobs will be lost as a result of higher costs to employers, global competition and an "anemic" ec onomy. They say small employers will struggle to make a profit and be forced to comparatively increase wages for all employees.
From a more partisan stance, Bob Dole said that the wage hike would be a "helpful, but small, step toward addressing the economic anxiety of American workers." His alternative is a 15 percent tax cut proposal, designed to reduce the deficit, balance the b udget and spark economic growth.
What a tax cut will do for an economy is speculative. Skeptics must realize that the minimum wage has not been increased since 1991. Our buying power has actually decreased almost one-third since 1981 (Arizona Republic, June 11, 1996), which means that co sts have been rising while wages have remained relatively stagnant. Adjusted for inflation, minimum wage has been at its lowest value in 40 years.
All politics aside, according to the Aug. 21 edition of the Los Angeles Times , more than 80 percent of all Americans support a minimum wage increase. An increase means real money in the pockets of students, student-workers, employees, employers and ou r economy as a whole.
David H. Benton is a third-year law student, member of the ASUA President's cabinet and Arizona Student Association board member. His column, 'Another Perspective,' appears Tuesdays.
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