A prominent group pushing for a living wage at the University, dubbed "Workers and Students United," has renewed its calls for the University to adopt an inflation-indexed wage of $11.44 for both its contracted and direct employees. This number, based on calculations by the Economic Policy Institute, ostensibly reflects the cost of seven basic expenditure categories, including childcare, food and rent.
WASU member Jason Hickel said a "living wage is about ensuring that every full-time employee has the freedom to live a decent life." While this goal is certainly laudable, a plethora of legal, policy and economic concerns make the institution of a living wage ultimately undesirable and infeasible.
The most obvious problem with the current living wage proposal - a proposal outlined by WASU in a document titled, "Keeping Our Promises" - is the University's lack of legal authority to compel its third-party contracted companies to adopt a living wage.
The Virginia Public Procurement Act governs the terms of interaction between state institutions and private contractors and requires the University to select contractors based on "best value," i.e., quality work at a low price. Social policy considerations, such as wealth redistribution, cannot legally factor into this determination.
Regarding direct employees, of course, the University possesses greater legal, if not economic, latitude. Currently, direct University employees receive $10.14 a hour or $17.22 an hour when benefits are taken into consideration. But all economic exchanges involve trade-offs; bestowing higher wages on the University's least-compensated employees would exact deprivations in other areas.
The most obvious result of such a policy would be increased unemployment and layoffs among the University's unskilled employees. An artificially high wage imposed by fiat rather than allocated according to market concerns distorts the interaction of supply and demand, resulting in fewer workers employed at a higher salary bracket. For many, the result would be zero compensation rather than their current compensation.
The University has stated outright that higher wages would mean decreased employment. Susan Carkeek, University Vice President and Chief Human Resources Officer, said, "To increase the minimum hiring rate the University would need to employ fewer persons. Each person could receive higher pay but the cost would be cutting out a layer of employees whom we are now able to hire, train and develop."
For many unskilled employees, a willingness to work for a lower wage is their only competitive advantage. A living wage would deprive such workers of this competitive advantage and subsequently the ability to even obtain employment at the University. Like the minimum wage, a living wage would enhance the position of current labor while destroying the opportunities of the most vulnerable.
Layoffs would not be the only potential tradeoffs for adopting a living wage. If the University complied with WASU's "demands"
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