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As cities increase minimum wage, student workers get shortchanged

This year, the war for a higher minimum wage has come in the form of a series of local battles. As the federal rate of $7.25 turned five years old, states and cities took it upon themselves to boost the stagnant pay of low-wage workers.

The most notable victories came on Election Day, when four Republican-leaning states approved hikes through ballot initiatives. The year also saw big cites like Seattle, Chicago, and Oakland bring their minimum pay rates into the double digits.

The raises came as welcome news for low-wage workers, but the piecemeal fashion in which the measures were passed has created a confusing patchwork of laws that has left at least one sliver of the workforce in the lurch: student workers at state-funded universities.

The problem is an isolated one; it occurs at public universities located in cities with a minimum wage that’s higher than the state rate. Public universities are using their standing as state agencies to skirt these local laws and pay student workers the lower state minimum wage.

Take San Francisco State University. The university pays 44% of its student workers less than San Francisco’s current minimum wage of $10.74, according to Inside Higher Ed. It bases that decision on the university’s status as a state agency.

The University of California at Berkeley pays about a quarter of its student workers less than Berkeley’s minimum wage of $10 per hour—a rate that went into effect on October 1 and is $1 more than the statewide minimum wage. The university, at one point, said this was due to its so-called constitutional autonomy, but Claire Holmes, associate vice chancellor of communications and public affairs, told Fortune that it’s because non-profits have until October 2015 to comply with Berkeley’s higher minimum wage. “By that date, UC Berkeley will pay all its workers wages that meet or exceed the municipal minimum wage level,” she said in an email.

The University of New Mexico in Albuquerque told Fortune that the minimum pay rate for the approximately 2,000 students it employs is above the state minimum wage of $7.50 and 10 cents below Albuquerque’s $8.60 rate. “UNM is a state institution and is not required to follow the city minimum wage,” said Brian Malone, director of the University of New Mexico’s student financial aid office.

When asked about the wage requirements for federal work study jobs at universities, a Department of Education spokesperson referred to the federal government’s student aid handbook, which says that employers must pay students at least the federal minimum wage unless a state or local law requires a higher minimum wage. In that case, “the school must pay the federal work study student that higher wage.”

That may seem cut and dry. But Paul Sonn, general counsel for the National Employment Law Project, said, “With public universities that are state entities, in some states, there’s a question of whether [the schools are] required to comply with higher local standards.”

Sonn said that state universities that pay student workers below city minimum wage can compensate non-student workers in the same manner. Though Jennifer Delaney, a professor of higher education at University of Illinois at Urbana-Champaign, notes that many non-student hourly workers at colleges are unionized or employed by third-party companies, meaning their pay is likely dictated by collective bargaining or outsourcing contracts.

When Chicago passed its minimum wage hike last week, the University of Illinois at Chicago suddenly faced its own state-versus-local minimum wage quandary. Thy Nguyen, UIC’s director of career services, talked to Fortune on Tuesday about how much the university would pay its student workers in July, when the city will increase its minimum wage from $8.25 to $10. Nguyen was somewhat iffy on what was legally required of the university, but he said that the university intended to comply with the city’s new minimum pay rate. Chicago Alderman Bob Fioretti, who represents the university’s ward, told Fortune on Wednesday that UIC must adhere to the city’s minimum wage increase. He said Chicago has so-called home rule authority—power awarded by the Illinois constitution to any municipality with 25,000 or more residents—that gives it the “right to raise the minimum wage, even at state-funded entities.”

The University of Washington will also face this issue. Seattle passed a law in June increasing its minimum wage to $15, well above the state’s $9.32 rate. Norm Arkans, a spokesperson for UW, said the school is waiting to receiving guidance from the state attorney general on whether the city’s minimum wage increase applies to the university. “We don’t think it does, but we need clarity,” he said. Even if UW is not required to comply with the new city law, it will likely raise student worker wages, anyway. “We are sympathetic to the notion of providing better wages to our students and our employees,” he said. “We’d like to try to comply with the spirit, if not the legality, of [the increase].”

Cases in which student workers earn less than their city’s minimum wage are—at the moment—somewhat rare. But as cities continue to hike their minimum wages, more students who attend and are employed by public universities could find themselves living in an expensive city but unable to access its higher pay guarantees. This trend comes at a time when the price of college continues to grow and students are increasingly covering the cost of their own education. According to a 2013 study by Citigroup, nearly 80% of college students are working while attending school for an average of 19 hours per week.

The confluence of these factors is a cause of concern for Michelle Asha Cooper, president of the Institute for Higher Education Policy, who fears that students will ditch their on-campus jobs for higher paying gigs at local restaurants or retail stores. When students work off-campus, she said, “they often tend to work too many hours, and that can have a negative impact on their academic health.”

For this reason, UIC had planned to abide by Chicago’s higher minimum wage, even if compliance wasn’t legally required. “It is going to be a big expense; we’re certainly cognizant of that,” Nguyen said.

The amount of federal dollars the university receives for its work study program will not change just because the school is required by city law to pay its student workers more, Nguyen noted, but concerns about student success and retention are more pressing.

“We certainly prefer students to work on campus, if they’re given that option,” he said, adding that on-campus jobs allow for more scheduling flexibility and are closer to students’ class locations. “It’s our belief that enabling students to work on campus means they’ll do better academically.”