Enrollment drops when minimum wages increase


When minimum wages go up, community college enrollment tends to drop, especially among part-time students, a new study suggests. But the same doesn’t happen among four-year institution students.

“While there are a number of other labor market and postsecondary factors that impact community college enrollment, large increases in the minimum wage over the last decade at the state and federal levels may be a contributing factor to the decline in aggregate community college enrollment evident over the last decade (from 7.2 million in 2010 to 4.7 million in 2020),” according to a new National Bureau of Economics Research (NBER) working paper.

The researchers found that after state-level minimum wages were raised, enrollment at two-year institutions dropped by 4% the year after and remained down for five years. For part-time students, the drop was 6%. Meanwhile, enrollment in four-year colleges remained unchanged.

NBER used various federal, state and local data in its analysis, including information from the U.S. Education Department’s IPEDS. It also looked at wage increase effects on college completion, and whether there are any differences based on gender and race/ethnicity.

In the first few years after a minimum wage increase, enrollment declines were somewhat larger among Hispanic students than among Black or white students, but the differences are not statistically significant, the study says.

Researchers noted the difficulty in measuring how wages affect completion, as many students who enter two-year colleges do not complete a program. It cited that only 29% of incoming certificate and associate degree-seeking students at community colleges complete the credential within three years.

Still, the study said that wage bumps don’t appear to have a measurable effect on completion, though the data suggest some negative effects on associate degree attainment among white and Hispanic women.

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