College students – Houghton STAR

Recent changes to the Free Application For Student Aid (FAFSA) system have made the application available since October 1, 2016, instead of on the traditional January 1 release date.

Photo by: Nate Moore

Because the FAFSA is available earlier, students and parents will complete it using tax information from two years ago. This means that this year, students and parents will fill out the FAFSA using their 2015 tax information, according to Financial Aid employee, Susanna Roorbach. The Federal Student Aid website said the new system offers several benefits. One of the benefits will be that the FAFSA will not involve as much estimation of finances since the taxes from two years prior will already be completed. Additionally, it will enable students to use the IRS Data Retrieval Tool to automatically import tax information to the FAFSA. According to a tutorial on the Federal Student Aid website, this tool makes the process of transferring tax information to the FAFSA faster and more accurate.

Some of the greatest benefits are for incoming first year students, Roorbach said. Before, prospective students had a narrow window between receiving their financial aid package from a school and the school’s deadline to enroll. The new system takes the pressure off for new students exploring their options. “It will allow students to have their financial aid award letters sooner and give them more time to make a decision,” said Roorbach.

For returning students, Roorbach said, “When we award financial aid at Houghton, we give students the best package we can up front and we typically don’t change that, but this could really affect federal and state aid.” Using tax information from two years prior means that it takes longer for a change in finances to affect a student’s federal and state aid. Roorbach said if a student has a circumstance where their income dropped significantly or they recently had high medical expenses, they can fill out a Special Circumstance form along with their FAFSA which will allow their aid to reflect these changes. On the other hand, if a student’s income rises significantly, this change will not catch up to their aid as quickly as in previous years, Roorbach said.

The Financial Aid Office is changing their calendar to accommodate these new deadlines, Roorbach said. She explained the new system will mean sending out financial aid packages from October until August. “It’s something we thought would be helpful for a while,” she said. “Now that it’s here it could be a little challenging to implement, but I think things will run a lot smoother once we have a year of using this system under our belts.”

These changes will likely be helpful to Houghton students across the board. According to the Houghton College website, students receive roughly $13 million in aid, grants, and scholarships.. Roorbach said returning students generally shouldn’t worry about completing the FAFSA until after Thanksgiving.

Minimum Wage: Tilting At Windmills

A growing number of Americans, academics, and politicians herald a rise in minimum wage as a solution to fight poverty. The concept seems simple, politicians agree what is a livable minimum wage and it becomes the law of the land. However, government solutions to economics typically resemble Don Quixote tilting at windmills.

While politicians may concoct a faux pas minimum or living wage, real wages are determined by a marketplace, not the government. As economist Paul Krugman once remarked, “Wages are a market price—determined by supply and demand, the same as the price of apples or coal.” In capitalist societies, corporations will pay dearly for specific skills or if labor is in short supply. Just ask Wal-Mart workers in Wilston, North Dakota who start at $17.40 an hour.

Now that government sets the minimum wage, employers must decide if the wage, benefits, taxes and training are worth the value of the task at hand. People with no experience or no diploma find it hard to enter the workforce. They are impeded from opportunity of economic mobility into future, better jobs. You won’t move up the ladder if you can’t get on the ladder.

Minimum wage not only shrinks job market perspectives, but also has a weak correlation to low wage workers and poverty, according to U.S. Census Bureau data. Economist Joseph Sabia found minimum wage increases on both the state and federal level between 2003 and 2007 “had no effect on state poverty rates.” According to Michael Strain of the American Enterprise Institute, “Less than 3% of hourly wage earners over the age of 24 earn at or below the federal minimum.” Most minimum wage earners are teenagers who are seeking work experience. These same teens face a 24% unemployment rate. It could be argued that high school and college workers with the need for experience should forgo any minimum wage. In the past, college students voluntarily traded labor for the experience gained from internship.

I discovered how differently fast food restaurants were operated while travelling around Europe playing baseball this summer. At a McDonald’s in La Rochelle, France, there was no counter person taking orders, instead it was a computer. Why would an American corporation be more technologically advanced in France than in their domestic franchises? I asked a French worker, who said McDonald’s found it more economically feasible to buy an expensive computer system rather than pay France’s minimum wage of $12.09 plus a multitude of benefits and payroll taxes gifted by French politicians.

When labor is costly and can be replaced by machines, most businesses invest in capital intensive systems. Even in the US, we are now witnessing technology replace the demand for workers. Check out your local bank with half the amount of tellers as it had ten years ago. Home Depot has automated cashiers. At Applebee’s, your “Neighborhood Grill and Bar,” don’t expect Flo, your favorite, neighborly waitress, to take your nachos order in the future. “Presto”—the tablet computer—has secretly been added to your table, next to the salt and pepper shakers. Since Presto works for free, should we tip Presto more than the customary 15%?

Small businesses are the engine of our economy. There should be little or no regulation on them, so long as it does not affect the safety of their employees or the public. Small businesses are typically underfunded and unable to immediately buy systems to replace people. In fact, these businesses can thrive by giving a human-touch experience versus their larger counterparts. However, the more we increase and mandate minimum wages and fringe benefits, once negotiated privately by consenting adults, the more we increase the problems we see in France. George W. Bush once quipped, “The trouble with the French is that they don’t have a word for entrepreneur.” If we keep on passing minimum wage laws, this country might not have a word for enterprise.