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Memorandum

12/21/2006

In 2000, The University of Arizona adopted a minimum pay rate of $7.50 for all employees in regular job titles, and increased that rate to $8.50 in 2003. This November, Arizona voters approved Proposition 202, which established a new Arizona Minimum Wage of $6.75 an hour effective on January 1, 2007. While employees in regular titles are already paid above this new minimum, approximately 2,300 student workers and roughly 275 ancillary classified staff members are currently paid less than $6.75 an hour.

While the Arizona universities are exempt from the new minimum, we have spent the last few weeks analyzing the impact of adopting the new State minimum wage. Through conversations with department leaders and conservative cost estimates, we determined that approximately $2 million would be required to meet the $6.75 target and address the concomitant pay compression that would result from the wage increase.

With cost projections in hand, we engaged members of the University community in discussions about the potential impact of a wage increase for thousands of student workers. We determined that auxiliary units would be most affected and that the wage increase would require several units to cut positions, reduce services and/or increase costs. It quickly became clear that such a move would have negative and unintended consequences for many student workers and those who rely on programs and services provided through units such as the Student Unions, the UA Bookstore, the University Libraries and Campus Recreation. Given this, the University will not require hiring units to adhere to the State's new minimum wage.

During the course of discussing possible options, several members of the University community questioned whether it would be "right" to pay student workers less than they could make off-campus. This is an important question and special consideration was given to the unique relationship each student worker has with the institution and the employing department. Clearly, some students will choose to seek employment with off-campus employers who provide higher wages. Others will choose on-campus employment recognizing that it supports student success by providing on-the-job learning opportunities and schedules that accommodate class, study and exam schedules.

While the University is not requiring hiring departments to adopt the new minimum wage, hiring managers are strongly encouraged to review their pay rates and consider adjustments where possible and practical in order to remain a competitive employer.

It is important to note that Arizona legislation may be followed by Congressional minimum wage initiatives. Should the federal government adopt a higher minimum wage, The University of Arizona would be required to meet it.