The prospect of increasing the federal minimum wage from $7.25 an hour to $15 an hour has prompted mixed feelings among Boilermakers and the wider Purdue community.
On Capitol Hill, the senator leading the push for a $15 federal minimum wage is Vermont Sen. Bernie Sanders, the Budget Committee chairman. His plan would gradually increase wages to $15 over a span of five years.
If passed, the measure could affect many student workers and hourly staff members who are currently paid less than $15 an hour.
In 2015, researchers from the Purdue School of Hospitality and Tourism Management published a study titled, “The Minimum Wage, A Competitive Wage and the Price of a Burger: Can Competitive Wages be Offered in Limited-Service Restaurants?” It concluded that increasing wages to $15 an hour would lead to an uptick of only 4.3% in prices for restaurants that offer prepared-to-order food and do not require tipping.
Ellen Kossek, a professor of management, said she supports raising the minimum wage and encouraged Purdue to take initiative on this subject.
“Employers that are progressive don’t wait for a law to be progressive, they act out of normative values,” Kossek said. “Purdue is a leader in many areas; perhaps they could try to be a leader in supporting minimum wage.”
Kossek said raising wages will not necessarily lead to a loss of other benefits or a price hike.
“Labor costs are not the only thing that impacts productivity,” she said. “There are ways to cut costs through university improvements, and we could increase productivity to offset wage increase by getting many to work more efficiently.
“They just have to find the money and not blame the minimum wage as a reason to cut other labor benefits.”
While some at Purdue are in favor of the change, there are others who are more skeptical. Sydney Terrell, a freshman and employee at Earhart Dining Court, said she fears a raise in her own wages might hurt her in other areas.
“I think it would be reasonable to say that it might raise tuition or the meal plan. Every pro has a con,” Terrell said. “Because everything will be more expensive, I doubt they will be able to hire workers. It will cut down the workforce.”
Terrell said she thinks that the minimum wage should be raised, but that $15 an hour seems extreme for a student worker at a dining court.
“We would be better off doing it in increments over the next four years,” she said. “That way, small businesses will be able to shift things around and afford it better.”
One local business already raised its wages to $15 an hour in the middle of a pandemic.
Patrick Hagmaier, owner of a local bar called The Pint at the bottom of the state Street hill, voluntarily raised wages across the board when the bar re-opened on June 14.
“This isn’t about making a financial decision,” Hagmaier said. “This is about making a human decision.”
Hagmaier said he was able to compensate for the higher labor cost by upping the beer price by $1 per pint and cutting his own pay. He said this decision was a way of providing a safety net for his employees.
“There is a lot of stress and uncertainty that comes with a tipped wage,” Hagmaier said. “You don’t know what you’re gonna walk away with when you go to work. The nice thing about moving everybody to $15 an hour plus tips is that you have the security of knowing, ‘I’m coming in, I’m going to work these hours, and this is how much money I’m going to have.’”
In Indiana, the minimum wage for tipped employees is $2.13 an hour. If tips combined with hourly wage is less than $7.25, then the employer is required to make up the difference. However, a report published by the Economic Policy Institute in 2014 found widespread violation of this requirement.
Ultimately, Hagmaier believes that raising wages to $15 an hour is about doing the right thing.
“This is something that I’ve wanted to do for a couple of years, but it seems like if there was a time to do it, it’s when everybody’s hurting the most,” he said.
“Spend a little money and take care of your people.”