A Minimum Wage Rollback Looms—Where is the Nonprofit Employer’s Voice?

Fight for $15 in Chicago: May 15 2014.” Credit: Bob Simpson

August 26, 2017; Washington Post

The issue of the minimum wage has often cropped up both in the headlines and on the political agendas of the federal government, state houses, and local municipalities. The “Fight for 15” is a common rallying cry for workers, labor unions, and others, including many nonprofit advocacy groups, as the reality dawns of what it takes to live above a subsistence level, particularly in urban areas. NPQ has written many times on this issue’s various aspects and its impact in both the for-profit and nonprofit sectors. As this article is being written on August 28, 2017, for the first time, a state will roll back a minimum wage set by a municipality.

As reported in the Washington Post, thousands of workers in St. Louis may be seeing smaller paychecks today when a new Missouri law takes effect. The law bars local governments from enacting minimum wage rates that differ from the state-set minimum. For the St. Louis workforce, the minimum hourly wage had increased to $10, but state law sets the lower bound at $7.70.

The city law went into effect earlier this year after the Missouri Supreme Court ruled that because there was no statewide law banning a minimum wage, the city was free to go higher if it chose. After the ruling, an estimated 30,000 minimum wage workers received raises that amounted to about an extra $200 per week, according to the St. Louis Post-Dispatch. The about-face from the state legislature came days after this court ruling, and the governor chose not to veto the law but to allow it to stand without his signature.

The dilemma now for both employers and workers in St. Louis and in Kansas City (where voters had approved a measure that would increase the minimum wage to $10 but had not yet seen it implemented) is in how to respond. Employers can continue to pay at the higher rate, or they can cut wages. For employers in the nonprofit sector, the choice isn’t easy, especially in this climate of competition and cutbacks, especially for funding from state and federal sources. Workers who for a short period of time had an increase of $2.30 per hour might be facing a rollback that could have them scrambling to make ends meet.

While over 100 St. Louis employers have said they will maintain the wage increases, most are small businesses and not the larger employers or nonprofits. As NPQ reported in July 2017, “The federal minimum wage hasn’t been raised since 2009. Over the last few years, dozens of city and county governments have passed minimum wage ordinances. So far, 27 states have passed laws requiring cities to abide by statewide wage minimums.”

The picture is not pretty for minimum wage workers, many of whom work in the nonprofit sector and in the service industry. Childcare workers, domestic workers, nursing home aides, and fast food employees often face the most impact from this kind of back-and-forth between city and state government. According to the Economic Policy Institute, a Washington-based research nonprofit, a report released Saturday said that Republican-controlled state legislatures increasingly use pre-emption laws to supersede local law. The report pointed to 33 labor and employment pre-emption laws passed by state governments since 2010. Examples from this report were cited by the Washington Post:

Among them was a law passed in Alabama that nullified a 2015 Birmingham ordinance that would have raised the city minimum wage to $10.10 by July 2017. In Iowa, Republican Gov. Terry Branstad in March signed a pre-emption law, nullifying wage hikes in two counties and stopping implementation in a third county before it could take effect. The statewide minimum wage in Alabama and Iowa is $7.25 per hour, the U.S. minimum.

There is an opportunity here for nonprofits and their funding sources to take the high road and support higher wages for their lowest-paid workers no matter what their state government sets as a base. But this will not be easy. Returning to NPQ’s coverage from July, nonprofits and those who fund them could collaborate to ensure that nonprofit employees receive salaries sufficient for survival:

In theory, this sounds like a winning situation. Workers’ rights coalitions are made up of staff who understand the impact of not providing livable wages to employees; however, they lack the funds to create powerful campaigns. It can also be argued that these coalitions also fall short in having their campaigns supported and led by influential community members. Foundations, on the other hand, have plenty of both funds and influence and wish to positively impact their communities.

The application of this plan, however, may prove to be difficult. Foundations tend to be formed by wealthy families or individuals—people who, arguably, may benefit from keeping wages low. Further, the boards of such foundations tend to lean conservative. It seems doubtful that conservative boards would approve funding such progressive campaigns.

With elected leaders at the state level leaning more to the right, and those leading municipalities bending left, the issue of a living wage in both the for-profit and nonprofit sectors will continue to be a ping-pong ball that’s batted back and forth. Unfortunately, it is the minimum wage workers who will feel the pain.—Carole Levine