Why Colleges and Universities Are Increasing Their Minimum Wages

Why Colleges and Universities Are Increasing Their Minimum Wages

For years, the average minimum wage in the U.S. has been $7.25 per hour. Although some institutions pay slightly higher, only a few of them have surpassed the $15-per-hour mark. Even worse, the COVID-19 recession not only resulted in massive job losses in the U.S. but also a cut in wages for those lucky enough to keep their jobs. Since a bigger percentage of the non-administrative staff in colleges and universities are people of color, low wages also trigger the issue of racial justice. As a result, some tertiary institutions have joined in the journey towards raising the minimum wage for their casual workers. Here’s some more information on this topic.

President Biden’s Wage Bill

As part of his campaign, President Joe Biden presented an economic plan to support the middle class, raise taxes on high-income earners, invest in green energy infrastructure, and extend healthcare. To execute this plan, Biden proposed a bill to increase the minimum wage for federal contractors to $15. If passed, this bill would help improve the livelihoods of contract workers such as cleaners, maintenance workers, nursing assistants, food service workers, laborers, and all non-administrative staff in tertiary learning institutions. The proposed raise was meant to stimulate economic activity by improving employee productivity, reducing employee turnover, increasing consumer spending, and promoting business development.

Unfortunately, despite the support this bill received from President Biden’s fellow democrats, it failed to become law. Even so, some colleges and universities have decided to implement the minimum wage increase either by choice or by state laws. For instance, states such as New York, California, Washington DC, Massachusetts, and Illinois approved the law requiring federal employers to increase the minimum wage to $15 over several years.

Colleges and Universities Increasing Their Minimum Wage

Even in states where the minimum wage bill didn’t go through, individual colleges and universities have opted to increase the minimum wages for their lowest-paid employees to $15 per hour. For instance, although the $15 minimum wage does not apply in Iowa, the management of Clarke University, a tertiary learning institution located in Iowa, has released plans to increase the minimum wage for their workers to the proposed figure, according to the Economic Policy Institute (EPI). Other institutions following the same track include Johns Hopkins University, the University of Kentucky, and the University of Rochester.

Reasons for Increasing the Minimum Wage in Colleges and Universities

Other than being required by law in some states, some colleges and universities, as well as other big employers, are raising their minimum wage to $15 for different reasons, including the following.

Protecting Reputation

In 2012, the Service Employees International Union (SEIU) and other groups initiated a fight for a $15 minimum wage for essential workers. Since then, they have been advocating for an increase in the minimum wage, something which has borne fruits in some states. For instance, industry-leading employers such as Amazon and Target have so far increased their minimum wage to at least $15. Considering colleges and universities are also among the biggest employers in the U.S., the wage issue creates competition between tertiary institutions and other leading employers. More specifically, big employers who pay their workers lower than $15 will most likely suffer reputational damage, with potential employees and even clients shunning them. For instance, Wendy’s is one of the companies in the spotlight for paying their workers lower than the proposed $15 minimum wage, as reported by Forbes Magazine. Such an issue can lead to employee strikes, causing chaos and altering operations. To remain reputable employers, most colleges and universities have decided to internally review their minimum wages and increase it to $15 or more.

Racial Justice

Like earlier said, most of the employees working in non-administrative positions in colleges and universities are either Black or Latinx. Because they are among the marginalized ethnic groups, paying them low wages amounts to racial injustice. This was one of the issues raised in the 2020 students’ racial justice movements, which aimed to promote racial equality, especially in American universities and colleges. To promote equality, big employers, including colleges and universities, have taken the initiative of treating their employees well, which also means paying them a $15 minimum wage. For example, 6000 university and hospital employees working for Johns Hopkins University will benefit from the raise. Even so, the raise is supposed to be gradually done over a certain period considering the U.S. economy is still recovering from the COVID-19 recession.


The COVID-19 recession greatly reduced the purchasing power for most Americans, especially those earning below the minimum wage. Even worse, these workers were at the forefront of the COVID-19 response. For instance, cleaners directly came into contact with infected surfaces striving to clean and disinfect for the safety of the general public. For these reasons, some college and university managements feel it will be just if they adopted the $15 minimum wage bill. For example, Clarke University is set to increase its minimum wage by 2026, after which they will review their wages against peer institutions in Iowa.

These are some of the details surrounding the increase of the minimum wage for college and university employees in the U.S. Are you interested in higher education management advice or looking for a consulting firm with experience with higher education institutions or medical centers?  Then don’t hesitate to contact the professionals at McKnight Associates, Inc.  We are ready to offer you hands-on human resources consulting for colleges, universities, medical centers, and organizations of all sizes.