November 2023

Increases in minimum wage decrease community college enrollment

Summary written by: Eleni X. Karageorge

A recent study examines the relationship between increases in minimum wage and decreases in community college enrollment, particularly among part-time students. In “Raising state minimum wages, lowering community college enrollment” (National Bureau of Economic Research, Working Paper 31540, August 2023), authors Diane Whitmore Schanzenbach, Julia A. Turner, and Sarah Turner conduct their analysis using enrollment data from 1986 to 2019.

The researchers collect enrollment and degree completion data from the Integrated Postsecondary Education Data System (from the National Center for Education Statistics). They then correlate these data with historical minimum wage changes at the state level using various sources, including state legislation, federal reports from the U.S. Bureau of Labor Statistics, and state labor department communications.

The study identifies nearly 400 state-level minimum wage changes between 1986 and 2019, with 170 of them representing an 8-percent or larger increase, which the researchers deemed “relevant” (based on the given level of change) for their analysis. Their findings show that enrollment in 2-year community colleges declined by slightly over 4 percent in the year following a relevant minimum wage increase. This decrease persisted for up to 5 years after the wage increase. However, enrollment in 4-year colleges did not change following the minimum wage increases.

The authors note that a large percentage of community college students, particularly those ages 18 to 24, work part-time jobs. Roughly 58 percent of these students have jobs, compared with about 46 percent of their counterparts at 4-year institutions.

The researchers also find that part-time enrollment, which is about 60 percent of 2-year college enrollments, decreased by 6 percent in the year following a relevant minimum wage increase. This decrease in part-time enrollment continued throughout the study period (1986 to 2019), while the decrease in full-time enrollment was less (about 2 percent) but persistent. In contrast to community colleges, 4-year colleges and universities were unaffected by minimum wage increases. Their enrollments showed no changes, although part-time enrollment rose by 3 percent in the years following a minimum wage increase.

The study also examines the impact of minimum wage increases on degree completion at 2-year colleges by looking at certificate programs with various durations and 2-year associate’s degrees. From their analysis, the authors find that certificate and degree-completion rates remained unchanged, despite enrollment declining at 2-year colleges. The only notable decrease was associate’s degree attainment for women, which declined by about 3 percent for 3 years after a minimum wage increase. Although women make up approximately 60 percent of enrollment at public 2-year institutions, no difference was found between men and women in their enrollment response to minimum wage increases.

The research reveals a negative correlation between minimum wage increases and community college enrollment, particularly among part-time students, but finds no impact on degree completion. The authors note various reasons students choose not to attend college: the lure of finding employment and earning income, the opportunity costs associated with this decision, and employers who offered on-the-job training or educational benefits for the lack of formal education. Schanzenbach, Turner, and Turner find that their research further raises questions about the long-term consequences of not attending college.