Is $15/hour the Answer to Economic Inequality on College Campuses?

Blog Post
Sept. 26, 2022

When most people think of the start of the fall term, campus move-in days, Greek life events, and welcome back messages from campus leaders encouraging student engagement come to mind. However, in the wake of a global pandemic that has left many youths and young adults with unresolved economic and mental health concerns, this is not the reality for many. Despite college leaders’ best intentions to promote a welcoming, caring, and inclusive environment for all learners–including their neediest students–many continue to perpetuate a cycle of economic inequality through outdated and stunningly low minimum student wages that sustain an inequitable college experience. Consequently, the road to a college degree or credential looks unequivocally different for first-generation students from low-income backgrounds compared to their well-off, legacy peers.

Unlike affluent students, research shows that low-income students face severe pressure to  financially and materially support struggling family members. They also are expected to work throughout college to secure their basic needs, such as affordable housing and food. Despite the emergence of college promise programs that typically only waive tuition and fees, some students still need to work because they are financially independent or just unable to count on family support.

For example, Illinois residents from families earning less than $67,100 qualify for the Illinois Commitment, a last-dollar financial aid program offered by the University of Illinois–Urbana-Champaign. As an alum, I am pleased to see the campus taking a progressive step towards releasing future graduates (and their immediate and future families) from financially crippling student debt by covering tuition and fees. Nevertheless, low-income students will still have to pick up the meal and housing tab.

But as rent and food prices continue to surge across the nation, college leaders must prioritize addressing more than just a student’s tuition and decrease the economic strain caused by low wages that hit low-income students and virtually all undergraduates. That said, increasing the starting minimum wage for students receiving federal work-study must be a central part of the solution.  

Origins and Shortcomings of Federal Work-Study 

Considered one of the earliest forms of federal financial aid, the Federal Work-Study (FWS) Program has been instrumental in expanding access to higher education through work-based learning opportunities. The federal aid program was initially introduced through the Economic Opportunity Act of 1964 to help students from low-income families access essential financial resources to complete college expenses through part-time employment. Students must submit a Free Application for Federal Student Aid (FAFSA) to qualify, which assesses their demonstrated financial need and expected family contribution. Colleges and universities distribute FWS aid to students in combination with other sources of financial assistance, such as scholarships, Pell grants, and loans. They ultimately have the discretion to prioritize eligible applicants. According to the Education Department, the federal government spent about $1.2 billion in FY 2020-21, serving over half a million students each year. 

Despite FWS’s influential role in promoting access to postsecondary opportunities–especially for historically excluded and underserved communities–federal policymakers must rethink its current structure, including its inadequate funding level and outdated formula used to distribute funding based on institution type. Federal funding for the FWS program has remained stagnant, increasing by just 2 percent over the last decade. Moreover, the 2020-21 funding level for the FWS program–set at $1.2 billion–contrasts sharply with other federal aid programs like the Pell Grant, where the federal government spent almost $26 billion. For the 2022-23 fiscal year, FWS funding is expected to increase by just $20 million. 

Because of the antiquated and paradoxical manner in which funding distributions are made to institutions, experts have pointed out how colleges serving more significant numbers of low-income students are disproportionately funded compared to institutions enrolling fewer low-income students. Colleges and universities are required to subsidize only 25 percent of students’ wages. In contrast, for-profit businesses and organizations must cover 50 percent and 75 percent of student wages, respectively. Despite the financial savings accrued by the more than 3,400 institutions participating in the program each year, FWS-eligible students remain poorly paid on many campuses, often below the state’s minimum (see map below for information on student minimum wage by state).  

Students' Petition for $15/Hour Gaining Momentum

Just ask Katie Daly–a vibrant, twenty-three-year-old and recent college graduate–who juggled multiple part-time, (non-)FWS jobs to stay afloat. When she initially applied to college, she was discouraged by the limited merit-based scholarship aid she had been given. “I was pretty sure I wanted to go to the University of Minnesota by the time I got my financial aid letter. But when I got it, I felt more deterred from making that selection,” she said.

However, as a Minneapolis native, attending the university offered Katie the unique benefit of remaining close to home. During our interview, she told me that despite receiving various forms of financial aid to attend college (i.e., FWS, scholarships, loans), she ultimately felt that it did not entirely eliminate the economic burden she experienced as a low-income student. “Confused, exploited, and disappointed” captures how Katie Daley felt as she transitioned into her first FWS job on campus. She immediately noticed her salary was less than in previous positions in high school. The financial strain she endured climaxed during the pandemic, launching a petition on to advocate for a $15 hourly student minimum wage. 

“The unjust practice of paying student wages that are neither competitive nor commensurate with inflation and the surging cost of living may ultimately undermine institutional efforts to promote student persistence and completion.”

In August, after several years of persistent student advocacy, the University of Minnesota announced via systemwide email that the student salary base would increase to $15 an hour. “​​Raising our student worker wage floor will allow the University to be more competitive in recruiting and retaining student workers, as employers surrounding University campuses statewide have raised their wages in response to a tight labor market,” according to Kenneth Horstman, Vice President for Human Resources.

Beyond remaining “competitive” with corporations and small businesses already offering more competitive wages, college leaders must do more to facilitate access to livable wages for all learners, especially their most economically disadvantaged students. 

Implement a starting $15 Hourly Salary for Student Workers. Reimagining norms around student worker compensation that often deter learners–especially those from the most economically disadvantaged backgrounds–from seeking jobs on-campus will ultimately strengthen broader institutional efforts to improve student engagement and prepare workforce-ready graduates. For example, our research found that campus leaders at Salt Lake City Community College in Utah announced a new $15 hourly student salary base in response to growing market competition and to keep students employed on-campus. Campus administrators at Cuyahoga Community College that we interviewed emphasized that the expansion of their Summer Internship Program was informed by evidence of improved student retention. The unjust practice of paying student wages that are neither competitive nor commensurate with inflation and the surging cost of living may ultimately undermine institutional efforts to promote student persistence and completion. 

Incentivize On-Campus Student Employment. The benefits and perks of working on campus differ for students at two-year institutions who tend to be older, have dependents, and are financially independent. At this moment, community colleges must reconsider the students’ holistic needs. For example, our report found that students value paid work-based learning opportunities on-campus, but low wages combined with no incentives may be a few reasons some students choose to work off-campus. Performance-based salary increases, subsidized and priority access to campus-based child support, and access to free public transportation cards are just a few ways community college leaders can incentivize student workers. 

Conduct Focus Groups with Student Workers to Redress Needs. Although some college leaders recognize that undergraduates have many more options for student employment off-campus, few have invited students to the table to discuss more equitable compensation and benefits. If college leaders want to lessen barriers to participation in on-campus paid work-based learning opportunities, centering student voices in campus policy is critical. Conducting end-of-year focus groups annually with students employed on campus or in the local community will help ensure that student’s needs are holistically met. 

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Dr. Mauriell Amechi is a Senior Policy Analyst on Education and Labor at New America. Follow me on Twitter or LinkedIn. Check out my website here.