Both Republicans and Democrats have supported a bill that would (and since passage is certain, will) create state scholarships exclusively for minimum-wage workers. The bill, HB 1140, is discussed on the Pope Center site today.
It puzzles me that our legislators are so willing to ignore the fact that laws create incentives. Essentially, the bill gives priority to minimum-wage workers when the state taps the lottery’s scholarship funds; it also expands the amount of aid these workers can receive compared to other recipients of lottery scholarships. Five per cent of the scholarship fund (about $1.8 million) this year and 10 per cent next year will go to this special scholarship.
Thanks to this law, earning the minimum wage will be the ticket to a scholarship. What kind of incentive does this provide–what does it do to workers’ desires to become more productive and earn more? We are rewarding people for earning as little as possible. (And indirectly we are also rewarding businesses for not paying more.)
Why this legislation? My guess is that it provides “cover” for the leadership, which is allowing much more expensive special-interest scholarships to continue–by allowing booster clubs to pay in-state tuition for scholarships for out-of-state students (mostly athletes). This $10 million-a-year taxpayer subsidy of well-heeled university boosters should cause embarrassment and probably does.
The minimum-wage scholarship may provide legislators with a fig leaf, but it has its own harmful impacts.
