Potential Increase In Federal Minimum Wage May Affect OU Student Employees

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Much of the buzz following President Barack Obama's "State of the Union" address centered around his intention to implement a 40 percent increase to the national minimum wage. 

"In the coming weeks, I will issue an executive order requiring federal contractors to pay their federally-funded employees a fair wage of at least $10.10 an hour because if you cook our troops' meas or wash their dishes, you should not have to live in poverty," President Obama said during the address Tuesday. 

However, a local economist feels this could eventually have an unfavorable social and economic impact. 

"Economist of all stripes will agree that if you raise the price of something dramatically, you will have an impact and that economic impact is often unemployment for some," said Dr. Richard Vedder, an economics professor at Ohio University. 

The university could feel the burden too as research at OU is conducted under federal contracts for the government. According to Dr. Vedder, some student employees may already be paid using federal funds. He adds that under an expansive definition of this policy, salaries for some faculty and students may be impacted. 

"While some of them might want to jump for joy at the prospect of getting a 10 or 20 percent raise…they may find themselves having their hours reduced…or maybe even lose a job all together."

Following Obama's speech, Republican Senator Rob Portman said minimum wage is not the problem – reducing unemployment starts in the private sector. 

"We need to figure out a way to get the economy going through the private sector and I think the president and congress can work together on that," Portman said. 

Dr. Vedder also states that the president's immigration reforms may impact international students at OU and their ability to obtain visas. He adds that the proposed retirement plans will impact the aging population in southeast Ohio.