California Nonprofits Back Minimum Wage Increase—Conditionally

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January 21, 2015; California Newswire

The state nonprofit association of California has announced its support of an increase in the state’s minimum wage, but with two conditions—that California lawmakers take steps to ensure that minimum wage increases are sufficient enough to compensate families that might become disqualified for public benefits such as Section 8 rent supplements or SSI payments (Supplemental Security Income) as a result of their higher wages, and that local and state government agencies work with nonprofits to find additional state and federal money to compensate them for the costs of wage increases.

“Opponents of minimum wage increases often try to use to nonprofits as a ‘front man,’” said Jan Masaoka, the CEO of the California Association of Nonprofits (CalNonprofits). “In fact, our members not only support increased minimum wages, but are eager to work with city and state officials on both legislation and implementation.”

However, a CalNonprofits survey of its members, with 329 organizations responding, showed that nonprofits do have some concerns even while they generally support a higher minimum wage:

  • Eighty-three of the 329 responding organizations had at least one employee paid at minimum wage. Those 83 nonprofits averaged 11 percent of their employees paid at that level.
  • Despite the general support for a higher minimum wage, nonprofits called for a “phase-in” period during which funding from state and federal contracts might be adjusted upwards to reflect the higher wage costs.
  • Like the official position of CalNonprofits, survey respondents indicated that they were concerned about low-income clients losing eligibility for means-tested programs such as Medi-Cal and SSI.

Although CalNonprofits has come out in support of the concept of a minimum wage increase, there were survey respondents who seemed to have deep concerns that would put them on the other side of the issue:

  • “Most community-based nonprofits that have federal or state funds for job training programs are not receiving any additional funding to mitigate the increases,” said one nonprofit with significant government program support, reflecting a perspective shared by others. “As such, we are forced to either lay off workers or severely cut back hours.”
  • “As a provider of care for children after school, we do not have a ‘product’ that we can increase prices for as our services are at no cost,” said another nonprofit, one largely without government funding. “So we have to decrease services, lay off workers and work harder to raise more funds. We are the only service provider of our kind in our small town, as well as one of the largest employers.”
  • “There is a no-man’s-land between qualifying for income assistance and income security/independence that we need to be mindful of,” added a third, concerned about clients’ eligibility for benefits. “If the minimum wage increases, it may be necessary to also increase the levels at which people no longer qualify for certain types of assistance.”

California has a number of minimum wage and living wage proposals being debated across the state. Last fall, the Los Angeles city council enacted a $15.37 minimum wage for hotel workers to take effect later this year. San Diego’s minimum wage rose to $9.75 an hour as of January 1. This year, the minimum wage increased in San Francisco to $11.05 an hour and in San Jose to $10.30 an hour. Slated to rise to $10.00 an hour in January of next year, California’s current statewide minimum wage is already $9.00 an hour, higher than the federal minimum wage of $7.25 an hour. The reality for nonprofits in California or anyplace is that the movement toward raising the minimum wage is gaining steam across the nation—not necessarily at equal speeds, but it is happening. Where and how nonprofit trade associations come out on the issue will be an indication of how nonprofits balance out their social missions on behalf of the advancement of the poor against their fiscal realities dependent on often inadequate and fickle sources of government and charitable dollars.—Rick Cohen

  • Jan Masaoka

    Thank you, Rick and NPQ, for publicizing this important issue. A quick clarification: we do not have “conditions” which we would require in order for us to support increases in the minimum wage. We support increases. We have recommendations that we urge legislators to take into account when designing proposed legislation and for state and local administrators during implementation phases.

    Our Policy Director Nancy Berlin has been meeting with dozens of nonprofits on this issue, as well as with several elected officials and administrators, and our Sacramento Advocate Jennifer Fearing is drafting a statement of our prospective support for Mark Leno’s state bill on the issue. For more information nonprofits can stay in touch through our eAlerts or by contacting us directly.

    Thank you again. What would the nonprofit sector do without NPQ and Rick Cohen! Jan

  • michael

    This article highlights the inherent unintended consequences in trying to mandate a minimum wage.

    • If a nonprofits say it would be forced to layoff staff without a large infusion of government cash, how will private business react? What impact will this have on cash-strapped local and state governments?

    • Absent such subsidies, both nonprofits and private business will cut workers or replace them with technology, increasing the strain on social services.

    • If an organization (private or nonprofit) is required to lift it’s lowest workers from $8-9/hr to $12-13/hr, what type of upward pressure will that have on the rest of staff salaries? If you were making $17/hr supervising minimum wage workers, what would your salary expectations be once your charges get a $4/hr raise?

    • If raising the minimum is designed to create a ‘living wage’, then why is it necessary to expand eligibility for social welfare benefits? Are we suggesting that workers would drop out of employment rather than risk the loss of social welfare?

    Rather than continue with these piecemeal efforts at trying to make work pay, we should revisit Milton Friedman’s Guaranteed Minimum Income idea. Or even better, a flat tax with a negative income tax.