SADOW: Centenary College Follows Obama’s Lead On Minimum Wage

It’s not that Centenary College asks students and their families to pay a lot more, or perhaps even at all, to make an ideological point, but it is that the school’s administration is willing to put fashion ahead of its education mission.

Last month, in this year’s State of the Union address, Pres. Barack Obama exhorted that American subnational governments (that had not yet done so) raise their minimum wage laws to $10.10 an hour. Of course, doing this, or even having such a notion as a minimum wage, betrays profound ignorance of economics. In a market system with provisions against monopoly, the market sets wages in proportion to the benefits they provide society through the activity being compensated. Artificially inflating wages only serves to channel resources inappropriately, removing them from more productive uses that if they instead went to those uses then would increase overall societal wealth, including a rise in the absolute living standards of the lowest wage earners (of which 2.9 percent of all workers make the minimum wage, of which two-thirds are part-timers, most of whom are not sole breadwinners, and half are 24 or younger).

This also promotes increased unemployment, as the pot of money (which now will grow more slowly because of the misallocation) is allowed to be divided among fewer individuals, and fewer jobs holds down the rising of levels for everybody. While some analysts, who no doubt believe that money grows on trees and in the Tooth Fairy who brings it from nowhere, argue that this increases purchasing power of the recipients which should promote economic growth, they either are too ignorant to grasp or deliberately ignore that the money is redistributed from elsewhere, and from its more productive uses. It’s nothing more than wealth redistribution for unjustifiable reasons, and an immoral act that deprives those the least able (if willing) to contribute to society by erasing their means by which to achieve this.

Except that Obama and his ilk think there is such a permissible reason. They have faith in the pernicious idea that it’s not maximizing absolute living standards that government should promote, but relative living standards, or what they term as narrowing “income inequality.” They hold the curious view that something structurally wrong exists in the free market that makes the holders of greater wealth “lucky” compared to those that don’t, and in fact promote the bizarre notion that the “lucky” are able to corrupt the system to perpetuate the differences. This flight from reality would be laughable if its execution in government policy didn’t compromise property rights and visit misery onto those of the lowest wealth strata who would benefit most relatively from economic growth.

Unfortunately, that also seems to be the thinking of Centenary President David Rowe, who declared after the speech that he was raising the wages of roughly 25 employees up to that level. He also got, although described as eliciting “no pushback” but which possibly might have involved threats about future deals if not enacted immediately, the two private sector service vendors on campus to do the same for hundreds of more employees. That boost might have been legitimate had Centenary had complaints about those services that it felt could be addressed by paying higher wages to get higher quality workers, but there’s no indication that this was an issue.

Despite the ultimate effect of his action, Rowe probably by this time in his career knows his organization doesn’t operate in a vacuum. Assuming each Centenary employee gets an average $1.50 bump (ignoring another deleterious effect of the minimum wage, additionally inflating wages of employees currently just above it in order to prevent loss of morale in their realizing others in far less contributory jobs now are making almost the same that they do) and they are all full-time, that’s an extra $75,000 a year. Even though Centenary had severe financial problems recently that required considerable downscaling of both sports programs and academics, given it collected in fiscal year 2013 revenues of around $45 million a year and sits on $51 million in net assets ($28 million current), and with a $125 million endowment it probably can eat that without passing it along to families.

Whether it can do so when contracts get renegotiated with the providers is another matter. And when a year’s worth of full course load tuition alone (without academic, room, board, and parking) costs almost $31,000 annually, current and prospective students and their families should not enjoy the fact that they may be asked to pay for affectation, not better education.

Because in the final analysis, that’s the signal that Centenary sends to the world by an action like this. This denotes that Centenary is unserious about education by its willingness to follow faddishness, despite and in spite of faculty efforts to try to provide a quality educational experience. When the administration seeks correctness on the basis of half-baked understandings, it invariably colors the image of the school’s academics, and as a result those considering availing themselves of that service must question the commitment of the school to quality education.

Rowe’s decision might have grabbed headlines, but its consequences of potentially offloading costs onto consumers and/or threatening further deterioration of the school’s finances, as well as its tacit endorsement of policy the immorality of which is defined by its hurting society more than helping, should make students, their families, and donors reevaluate their attachments to the school as long as this kind of leadership persists.

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