Last week, Chancellor Wiley signed into effect the university's new policy on Limited Term Employment. This issue has mainly been promoted on campus as a social justice imperative, and while it is tempting to believe that we need only adopt a new policy to put us one step closer to a just society, it is necessary to take a closer look at the policy to see if the changes will have their intended effects and to determine whether different policies could be more effective in achieving the stated social goals.
The most publicized aspect of the new arrangement is the implementation of a minimum living wage for the majority of LTE positions—which has been set at $10.23 per hour, or 110 percent of the poverty level for a family of four in Madison.
Opponents of the living wage may claim that this pay increase will result in fewer people being employed by the university, but as the increase is modest—the current mean and median wages for LTE's are $12.57 and $10.82, respectively—and there exists no definitive consensus on the side effects of wage floors, the negative effects of the wage increase should be minimal.
The restructuring of LTE positions, on the other hand, is much more likely to have an impact on the hiring patterns of the university. Most current LTE employees are used on a full-time basis without receiving full-time benefits. These positions will be converted into full-time positions with benefits.
This is certainly good from a perspective of employment fairness and policy consistency, but if the university wants to increase its level of services provided, it will be less likely to create new full-time jobs to fill these needs in the future.
Under the new agreement, a department must justify a proposed LTE position to the administration. These positions now must be strictly seasonal or irregular. As the cost of adding a new full-time employee may be prohibitive, it is probable that departments will begin hiring more students to subvert the new LTE policy.
This could lead to less cohesive departments and is probably not an intended side-effect of the policy. These kinds of problems are common when labor markets become more rigid.
In this sense a just policy is not attainable, but most people would say that the increased welfare of those holding jobs that will be converted to official full-time positions probably outweighs the loss of would-be LTE openings.
Moreover, increased wages and more equitable treatment are not only attractive from an ethics viewpoint; in practice, firms are willing to hire workers at above-market wages in order to decrease turnover and increase productivity. UW-Madison is likely to benefit from these effects.
Overall, the biggest problem with the new policy lies in the wage increase. Poverty is characterized by low income, which is not necessarily the same as low wage. A person with a relatively low wage may not be impoverished due to outside income, family ties, etc. But there are better ways of decreasing poverty than the implementation of a wage floor.
Policies like the Earned Income Tax Credit—which in effect gives a wage boost at lower incomes and according to family situation—are better targeted toward fighting poverty than an across-the-board wage increase.
Thus a policy that aims to decrease poverty by targeting low-wage individuals will be inefficient, using money that could be better spent elsewhere in the university.
While this type of reform should have been looked into further when changing the policy on LTE positions, overall the new policy is well conceived and relatively sound. But, as always, there is room for improvement.
