Americans started this year on the right foot when it comes to how much money they earn. As their personal income increased, the economy reflected a positive change in wages and salaries unseen since June of last year. While fourteen states and cities rang in the new year with minimum wage increases, giving many Americans an extra boost, not everyone benefits from the higher payouts.
More than two-thirds of the New York Council of Nonprofits member organizations currently pay their workers less than $15 an hour. Nearly half of those members fear their financial viability would be threatened as Governor Cuomo seeks to increase New York state minimum wage to $15 by 2021. Being unable to compete with higher-paying jobs that require less experience, these nonprofit organizations believe the state should increase all contract amounts and reimbursable rates to fully offset for the additional costs incurred.
“Unlike McDonalds, we can’t raise the price of our hamburgers—we’re limited to the dollars we get from the state and we’re already operating under very, very tight budgets,” said Fredda Rosen, the executive director of Job Path. “We’re very worried [in our sector of people with developmental disabilities] and that’s felt across the human services sector. It’s an issue for those nonprofits that depend on state funding. In our sector, about 90% of our dollars are state dollars.”
Job Path is a nonprofit organization that has helped people with developmental disabilities find jobs, live in their own homes and become connected to community life since 1978. Rosen says that a mandated increase in the minimum wage, especially at the level the governor is proposing, would really put them “over the edge.”
In 2010, nonprofits accounted for 9.2 percent of all wages and salaries paid in the United States, according to the National Center for Charitable Statistics. The second largest nonprofit subsector after faith-based organizations is the human services sector, which includes jobs such as social and human service assistants, child, family and school social workers and rehabilitation counselors.
Rosen says people in this sector who do the hands on work are called direct support professional (DSP) and “nothing good happens in our world without a good DSP, they are amazingly hard working,” She adds they are required to take an enormous amount of training, from physical work to supporting someone on a job and “those individuals deserve a wage far, far greater than we have the funding to pay them, so we would love to see the funding come to enable us to increase their wages.”
While President Obama supports the Raise The Wage Act and has acted on an increase to a $10.10 federal minimum wage, advocates estimate different states demand higher living wages.
Alisson Sesso, executive director of the Human Services Council, says there are a lot of services that people don’t get as a result of not making a living wage—a minimum wage increase would lead to a decrease in the need for those services if people made a living wage.
New York has nearly 200,000 nonprofit workers and states raising the wage floor without providing new funding for human service providers “would spell disaster for many nonprofits,” according to the “15 and Funding” report from the Fiscal Policy Institute.
“In the big picture of life and policy in New York, we need this policy change and nonprofits, given the work that they’re doing in communities, would be better off and would have to serve less people in the community, less intensely,” Sesso says. “If we would be able to pay a better wage, there would be the ability to recruit and retain workers in a much more meaningful way and that would have better implication on the outcomes that we’re able to achieve with the people that we’re serving.”
Organizations are supportive of the minimum wage increase but they feel the state’s need to be responsible for matching the funding for nonprofit organizations.
“We’re in a bind now because if we’re using all of those [state] dollars now, there’s no way to pay the wages the governor is requesting without an increase in our funds,” Rosen says. “It’s not hyperbole to say many of us fear going out of business entirely.”