UVa Raising Minimum Wage to $15

Demonstrators backing the Living Wage in a rally outside the Rotunda earlier this month. Photo credit: Cavalier Daily

I’ll give the University of Virginia credit for raising the minimum wage it pays its employees to $15 an hour. The University is putting its money where its proverbial mouth is. It doesn’t just preach social justice for others — it practices its version of social justice itself.

It turns out that increasing the minimum wage for 1,400 employees on the Grounds is a bit trickier than envisioned, however. As the Cavalier Daily reports, “a variety of legal barriers may complicate that endeavor for those who are employed by external contractors rather than the University itself.” UVa President Jim Ryan said the increase, which will go into full effect Jan.1, 2020,  will apply to only 60% of full-time employees who earn less than $15 an hour. But the university is working to extend the same wage to outside contractors. Said Ryan: “This is legally and logistically more complicated, but our goal is to make it happen.”

Raising the minimum wage creates a secondary problem known as wage compression, reducing the wage premium for those with greater skills, seniority or responsibility earning about $15 an hour. To compensate, UVa will raise wages for about 700 other employees. All told, the minimum-wage initiative will cost the University about $4 million.

Bacon’s bottom line: I adamantly oppose state-mandated increases to the minimum wage. But if UVa makes a voluntary decision to boost its pay to lower-income employees, that’s fine with me. Personally, I think pay raises should be connected to productivity and merit rather than dispensed wholesale, but that’s a personal preference. In a free economy, UVa should be allowed to create a compensation system that reflects its own values and priorities.

Approving of UVa’s minimum wage is not the same as approving of a state-mandated minimum wage. UVa enjoys an envious position in the marketplace that other employers do not. UVa has the pricing power to pass along higher labor costs to its customers — its students — in the form of higher tuition, fees and charges. That may cause a problem for lower-income students who have to go deeper into student-loan debt in order to attend the university, but they comprise a largely invisible constituency.

Let’s face it, being a UVa administrator or tenured professor is the epitomy of white privilege. Only 18.6% of the faculty is classified as minority, according UVA’s Diversity Dashboard, and that includes blacks, Hispanics, Asians, and others. The percentage of minorities on staff is about the same at 19.0%. But it’s a good bet that whites predominate the upper echelons of the administrative staff while minorities predominate in the lower paid occupations. Not only do tenured faculty and higher-level staff jobs pay well, they are sinecures. Once you’re in, you stay in. Raising the minimum wage for lower-income employees allows UVa’s top dogs to feel virtuous even as they pass on the costs to others.

But the larger point is this: UVa can afford pay practices that, say, the manager of a McDonald’s franchise or a JC Penneys could not dream of. No low-income worker will lose his job because UVa was forced to pay him more than he could contribute in economic value.

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12 responses to “UVa Raising Minimum Wage to $15

  1. UVA is swimming upstream on this. It will be hard for them to put out
    an RFP for contracting services and NOT take the low bid!

    We may not like mandated minimum wage but the reality is we pay a LOT of taxes for folks needs who don’t get the minimum wage.

    We have a million people in Virginia getting health care from other taxpayers and that’s just the beginning. That’s about 8 billion dollars and if my math is right – that’s a $1000 per capita – even more if we just count taxpayers.

    In fact, if you count public education which is financed by everyone, not just current parents…:

  2. http://data.richmond.com/salaries/2016/state/university-of-virginia

    Hmmm. The RTD’s salary database apparently doesn’t track hourly employees? Only salaried? This indicates fewer than 100 earning less than $25,000 at UVA in 2016. Fun database, BTW. So Pres Sullivan at that point made 50 times the minimum wage – of course that is only part of her salary, the state part. One VP for Administrative Do-Nothing Really could be eliminated and probably cover the entire cost of all of these wage hikes. One VP.

    Watch them cite this decision as one justification for the next tuition increase….And, Jim, you are dead wrong that over time the higher wages will not mean fewer positions available for those not qualified for more skilled work, or for those in their first job. It will accelerate automation. Is that $15 an hour also covering student work-study deals?

    What I find amazing is that the bastion of virtue had 1,400 employees earning that little in the first place. I think in the last contract the right out of high school starting wage at NNS was over $17 an hour, a couple of years ago.

  3. Some people will lose jobs. Any employer cannot afford to pay a lot of people who don’t deliver at least $15 per hour in value. There will also be wage compression as UVA and its contractors look for savings by not increasing compensation for those who are paid above, but close to, $15 per hour.

    UVA should consider funding at least some of these costs by reducing the compensation paid at the highest levels. Economic justice, as I understand it, also includes overpaying some employees at the top.

    And automation’s pace is going to sky-rocket. We will see more robots doing unskilled work. The more one has to pay for unskilled labor, the more the investment in replacement technology becomes attractive.

    • The contractors in particular will be able to move to different systems to meet the new wage requirement, yet win with the best value bid. I suspect that while $15 is going to be the new target, most of those getting a raise to that were already above the minimum and were earning in the $10-12 range. The marketplace’s real minimum for anyone but the lowest-skilled starting worker is well above $7.25 just about everywhere.

      • OK, you win. You’re right about the contractors. They’ll still face competitive pressures, even if UVa as an institution does not. If everyone bidding on a contract pays the same $15 minimum wage, an incentive will exist to submit the low bid by finding labor-saving ways to perform the work.

        That logic applies to 40% of the workforce.

  4. The logic that the higher the wage the fewer positions. How come that does not also applly to others with higher salaries in the workforce?

    If we pay police and teachers higher wages – how come that does not spur job loss?

    How about Amazon – and other high tech – higher salaries leads to layoffs?

    This is one of those things that in theory on paper there is a direct supply and demand relationship but in the “real” market – it’s not that way. If this theory were actually true – health increasing health care costs would result in cuts to employment… does not happen.

  5. “If we pay police and teachers higher wages – how come that does not spur job loss?”

    One, there is a monopoly on these services. It’s easier to sustain inefficiencies in a monopoly environment. Two, when the economy sours, local governments tend to cut back on hiring replacements and, in some instances, engage in layoffs. Fairfax County Police has not returned to expected staffing levels since the Great Recession. The Department is also actively investigating how it can transfer work from higher-paid police officers to lower-paid civilian employees.

    • “The Department is also actively investigating how it can transfer work from higher-paid police officers to lower-paid civilian employees.”

      Next your Fairfax County will be shifting these policing and teaching duties to robots. You think I am kidding? No, I am not. Just wait and see it happen.

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