Myths and Facts About Unemployment Compensation for Student Workers

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Opponents of allowing university student workers to earn unemployment compensation / insurance (UI) often get their facts wrong or don’t bother with facts at all, preferring to summarily dismiss the notion without serious consideration.

However, a sober examination of the merits and setbacks of enabling student workers as a UI-eligible class will show, time and again, the benefits outweigh the costs.

To educate decision makers and the general public, this informational article aims to dispel the many misconceptions surrounding the debate over whether to offer student workers the right to earn unemployment compensation or whether the historical ban should be continued.

MYTH: Full-time students are unavailable to pursue full-time work.

FACT: Full-time students are capable of either dropping classes within the first 6 weeks of each semester; withdrawing from classes after the 6-week mark; or skipping classes — even re-scheduling final exams — to accept an offer of full-time employment.

They are not obligated to turn down a full-time job just to stay in good standing with a school, especially one which probably won’t make any difference in their employ-ability.

MYTH: Student workers understand their jobs are limited-term employment (LTE) anyway, so they know well in advance they’ll need to find a follow-up job sooner than later.

FACT: Most public universities do not classify student employment as LTE! These are, in fact, ongoing positions. This may be confirmed by speaking with any UW business unit manager who supervises student workers.

The only term-of-employment difference between non-student LTE and student-only job is that the student might or might not be re-appointed, just the same as a “permanent” or non-temp job might be made redundant.

The latter workers receive unemployment benefits; so should student workers. This contrasts with the limited-term employee, who knows 100 percent that s/he will not be re-appointed, irrespective of one’s ability to re-enroll for classes or take other actions that extend the employment period.

MYTH: The 30-hours-weekly cap on student employment means they’re unable to work full-time.

FACT: Student workers can always take on a second part-time job — collectively bringing their weekly hours worked to 40 or more — or quit their student job and skip classes to work full-time if offered an off-campus job while still in school.

Either scenario indicates the student worker IS available for full-time employment; alleged “unavailability” for such work is simply NOT true.

MYTH: Student workers don’t care about earning unemployment compensation. After all, they never contacted me about the issue!

FACT: Student employees are increasingly informed of how they’re denied the right to earn unemployment compensation as part of their labor.

Historical ignorance is being replaced by awareness of one’s self-interest as a student-worker — and that interest includes earning UI, to pad against the sting of unemployment following graduation.

MYTH: Student workers are inferior workers who don’t deserve UI. They’re inefficient!

FACT: Inefficient student employees are disciplined and discharged / terminated / fired. Every student worker who performs well enough to maintain university-sponsored employment, until their non-reappointment on graduation day, is separated from his or her job by no fault of his or her own.

And if you claim student workers are held to different standards and therefore should not have UI, then remember apprentice and journeyman workers are just as eligible for unemployment compensation as master craftsmen, skilled workers, and office staff.

In other words: Allegedly inferior work output does not disqualify any non-discharged / non-terminated / non-fired / non-quitting worker from receiving UI.

Neither should it be grounds for banning eligibility for UI, as the supporters of the short-sighted prohibition from so many years ago (before the 1970s, according to the Legislative Reference Bureau) apparently failed to understand.

MYTH: The university system cannot afford the financial cost of permitting student employees to earn unemployment insurance.

FACT: The statewide unemployment compensation fund pays unemployment insurance. Those who are permitted to earn UI are covered by that expenditure fund.

Student workers will also be covered after the long-overdue repeal on the ban against student-worker UI.

The university would pay into the statewide unemployment benefits pool from the operating balance of those business units that utilize waged student labor.

Budgeting for Student-Worker Unemployment Compensation

Because UI payments are calculated on the base period compensation earned — in the case of the student worker, entirely wages because no pension, 401K, healthcare, or sick pay is conferred upon the student worker — up to $500 more per student worker per semester would be paid for those earning more than $10 hourly at the UW System cap of 30 student-work hours weekly.

The budgetary fund balance (BFB) shows how much cost the business unit can absorb without going into the red, and subtraction of (over-)estimated student-worker UI costs from the BFB shows the financial health of a business unit following the roll-out of unemployment compensation for student employees.

The following table lists maximum UI paid per semester and biennium, with the biennial UI cost also reflected as a percentage campus-wide biennial budget and relative to the auxiliary operating (BFB) of the campus budget.

The latter comparison to operating BFBs for auxiliary operations is important because Aux. Ops. is where most student-worker compensation occurs.

Selected campuses were chosen for demonstration purposes due to the relative increments between budgetary sizes, thereby facilitating subsequently scaled-up comparisons of student-worker UI cost vis-a-vis total campus budget and actual auxiliary services BFB.

Those who wish to view FY2014-2015 auxiliary operating BFBs for every campus may consult the budgetary screen capture following the table and related calculations.

Student-Employee Unemployment Compensation,
as Portions of Campus Operating Budgets
Semester Cost Annual Cost Portion of
Total Budget
Portion of
Aux Ops Budget
100 <$50,000 <$100,000 00.08%
(UW-River Falls)
(UW-River Falls)
300 <$150,000 <$300,000 00.16%
600 <$300,000 <$600,000 00.32%
(UW-Eau Claire)
(UW-Eau Claire)
1,000 <$500,000 <$1,000,000 00.42%
2,500 <$1,250,000 <$2,500,000 00.4%
5,000 <$2,500,000 <$5,000,000 00.18%

Even the largest feasible scale in the University of Wisconsin System — 5,000 student-workers, who cost the member campus a maximum of $5 million in UI contributions over 1 year — makes but a fifth-of-a-percent increase to the FY2014-2015 UW-Madison budget.

NOTE: To estimate the UI cost for the UW Colleges, the number of student workers must be tallied at each of the 13 two-year institutions. Until that information is disclosed, the sum of rounding errors among estimates of the student employees at each campus would make a preliminary guess at the UW Colleges’ total and Aux Ops percentages unreliable.

Budget Percentage Calculations

General Formula, % of Total: (Student-Worker UI Expense / Base Budget) * 100 = % Cost Increase from UI

General Formula, % of Aux Ops: (Student-Worker UI Expense / Aux Ops Budget) * 100 = % Cost Increase from UI

% of UW-River Falls Total: ($100,000 / $118,515,317) * 100
= 0.0008 * 100 = 00.08%

% of UW-River Falls Aux Ops: ($100,000 / $8,102,000) * 100
= 0.0123 * 100 = 01.12%

% of UW-Stout Total: ($300,000 / $184,327,866) * 100
= 0.0016 * 100 = 00.16%

% of UW-Stout Aux Ops: ($300,000 / $4,207,000) * 100
= 0.0713 * 100 = 07.13%

% of UW-Eau Claire Total: ($600,000 / $189,843,214) * 100
= 0.0032 * 100 = 00.32%

% of UW-Eau Claire Aux Ops: ($600,000 / $12,051,148) * 100
= 04.98 * 100 = 04.98%

% of UW-Oshkosh Total: ($1,000,000 / $235,709,381) * 100
= 0.0042 * 100 = 00.42%

% of UW-Oshkosh Total: ($1,000,000 / $14,390,964) * 100
= 06.95 * 100 = 06.95%

% of UW-Milwaukee Total: ($2,500,000 / $624,493,029) * 100
= 0.004 * 100 = 00.4%

% of UW-Milwaukee Aux Ops: ($2,500,000 / $6,796,951) * 100
= 0.3678 * 100 = 36.78%

% of UW-Madison Total: ($5,000,000 / $2,720,485,168) * 100
= 0.0018 * 100 = 00.18%

% of UW-Madison Aux Ops: ($5,000,000 / $88,342,399) * 100
= 0.0565 * 100 = 05.65%

Campus budget totals (on page 14) and Aux Ops BFBs (on page 16) were taken directly from the 52-page operating budget for the entire UW System.

This master budget summarizes many student-cost drivers within one document. It conveniently includes: tuition rates (schedules); university-owned housing costs (room rates, meal plans); semesterly textbook rental cost (at those campuses offering it); and miscellaneous fees (segregated / SUFAC fees, differential tuition) by campus.

Myriad cost comparisons are possible. For example, UW-Madison charges $700 less than UW-Milwaukee per semester for its dormitory meal plan because it receives 70 percent more revenue from gifts, grants, and contracts than UWM does.

Continuing on: Line-item budgets for business units at each campus are available via UW Red Book summaries.

Updates to the budget may be posted between fiscal years, but usually only if legislators decide to tweak the budget after the fact — such as to reflect an infusion of unemployment compensation payable to the state UI fund for every non-terminated student-worker.

Summary of Affordability & Feasibility

As shown from this composite graph derived from page 16 of the FY2014-2015 budget — an enlarged left column showing campus names and an enlarged right column showing auxiliary budgetary fund balance — every campus can accommodate UI fund contributions for up to half its respective enrollment’s equivalent in student workers.

This is well within the realm of feasibility because the actual number of student employees per campus is between 1 student job per 6 students at smaller campuses and 1 student job per 10 students at larger campuses.

Budgetary Fund Balances for the UW System, Fiscal year 2014-2015

May the critics present evidence contrary to my statements, as my claims regarding student-worker UI are well supported by the documentation displayed above and in my ground-breaking benefit-cost analysis of UI for student employees.

Now that you’ve been shown unemployment compensation for student employees would not only yield tangible economic benefits but also be affordable for UW campuses, here is my model legislation that will, in some way or form, be the basis of enabling legislation relating to UI for student workers.


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