Minimum Wage No Small Issue For Nonprofits

Minimum Wage No Small Issue For Nonprofits

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Unlike a big-name retailer or fast-food establishment that can absorb a wage increase by charging a few extra dollars for a cheeseburger, most nonprofits do not have such direct means of absorbing wage increases, said Doug Sauer, CEO of the New York Council of Nonprofits (NYCON). New York Gov. Andrew Cuomo has advocated for a $15 minimum wage in the state. Sauer estimated that about 550,000 nonprofit workers across the state are making less than $15. The figure is based on the state’s estimate of 3 million impacted employees statewide and the fact that 18 percent of New York’s workforce is in the tax-exempt sector, Sauer said.

The cumulative cost associated with increasing minimum wages in the nonprofit sector is unknown, Sauer said. A Head Start program that Sauer has been in contact with has 90 employees, for example, and would need to increase its $3 million budget by one-third to meet the obligation. As the program is 99-percent dependent on federal money, it would likely go under without a significant bump in support. Results of an impromptu poll conducted by NYCON this past October show nonprofit leaders leery of what might happen. Some 92 percent of leaders claim that their organization’s financial sustainability would be in jeopardy and 30 percent responded that employee benefits would be reduced. Organizations’ leaders appear supportive of wage increases, but unsure of the play-out, Sauer said.

“There’s a reason it’s an under-compensated workforce. It’s because government has seen it as a cheap workforce,” Sauer said of the nonprofit sector. “You can raise the wage, but if government doesn’t want to pay it and donors say ‘we want more bang for the buck,’ it’s not a stable workforce. We’re squeezed.” Sauer recognized that a bump in government contracts wouldn’t finance a minimum wage increase for many agencies and that fundraising for increased operating costs such as employee wages is not a sexy target.

Seeking better philanthropic support might be the best solution, given the volatility of government budgets, Sauer said.

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The NonProfit Times
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