$15 MINIMUM WAGE

Nonprofits Championed A Sorely Needed Boost For Workers; But the Law Adds to these Organizations’ Financial Challenges

A Missive from Human Services Council and FPWA

Second in a Series

Last year, New York and California adopted the historic $15/hour minimum wage law — an important vehicle for enabling self-sufficiency for workers and a defining symbol of the movement for an equitable economy.

The Human Services Council, FPWA, the Fiscal Policy Institute, and other organizations advocated strenuously for this measure – both out of our belief in its great value for those we serve and because many members of the human services workforce, whose salaries fall below the $15 per hour threshold and struggle financially themselves, would benefit.

These human services workers play vital and indispensable roles, helping low-income children, youth, families, immigrants, and seniors to rise above socioeconomic stresses, achieve stability, and pursue high aspirations. These efforts build well-being for those served directly and, they contribute to vibrant communities from which we all benefit. That these human services workers are contending with poverty is unacceptable, and a $15 minimum wage will translate to a meaningful quality-of-life improvement for them.

In New York City, the law will be implemented incrementally, rising to $15 per hour in 2018. To this point, the first installment has been executed, lifting the current minimum wage in the city to $11.50. Throughout the remainder of New York State, the current minimum wage has been raised to between $9.70 and $10 an hour depending on location, with the increase to $15/hour to occur in phases over the upcoming years.

To support the increase for human services workers functioning under City contracts, City government has extended the necessary funds to human services contracts, and City leaders have pledged to continue this practice until the law is fully executed.

But, with the exception of certain Medicaid-funded service providers, State government has not provided funds for the majority of human services workers functioning under State contracts and has not indicated a willingness to do so going forward — a move that has baffled and frustrated human services executives who are compelled to draw the funds from existing – and frequently highly compromised – organizational budgets.

The State has the ability to cover these expenses. Budgeting is a matter of asserting values and making choices and it is long past time that the State prioritized the human services workers and services that enrich our communities. The amount needed to fund the increase this year is $12 million and $25 million next year – sums that represents a mere .000007% and .000015% of the State’s budget this and next year, but that translates into sizable expenses for individual human services organizations. In dozens of interviews and focus groups conducted by Human Services Council, FPWA, and the Fiscal Policy Institute across the State, executives of human services organizations have described the budgetary pressures they continually face. One calculated that eliminating their entire senior management team would cover only a quarter of the increased expense associated with the minimum wage law.

Another factor, unacknowledged by the law, is that to avoid wage compression, human services workers with salaries currently at and above $15 per hour will be due increases and pay scales will need to be adjusted upwards across organizations. While these workers are deserving of raises, the budgets of most human services organizations cannot absorb them while still maintaining the same level of service provision — thereby compounding the difficulties of the unfunded minimum wage increase.

The primary reason for the budgetary dilemmas of human services organizations is chronic and systematic under-funding by government. Government contracts often fail to cover the full cost of services and they rarely provide overhead rates that permit programs to be properly supported by administrative functions. Also critical, government contracts frequently do not provide sufficient funds for the salaries and fringe benefits of human services workers while government employees (and those from the healthcare sector) with comparable responsibilities are far better compensated. This makes it difficult for human services organizations to retain and hire qualified staff, many of whom turn-over to government positions. In too many instances, these factors threaten the quality of services and prevent human services organizations from acting on bold and innovative ideas needed to reverse entrenched problems like high school dropout and homelessness.

State government’s withholding of the funds to cover the minimum wage increase is, then, highly ironic. The law was designed to support low-income people, but shortchanging human services organizations will have the effect of weakening these very entities that government has selected to carry out this mission.

The Human Services Council, FPWA, and Fiscal Policy Institute have created the Restore Opportunity Now campaign, a statewide coalition of over 350 organizations determined to secure greater investments in the human services sector. As Governor Cuomo and members of the State legislature negotiate the State budget, on behalf of our partners, we convey to them this message:

We applaud you for leading the effort nationally to increase the minimum wage. This policy will assist many New Yorkers, and it should serve as a springboard to others that further remedy our skewed economic systems. But if we are to achieve a truly equitable society, the human services sector – the engine for helping people transcend the barriers of class and race – must be entirely supported. It is imperative, then, that the minimum wage for human services workers is fully funded in the State’s 2017-18 budget.

– Contributed by Danny Rosenthal, a consultant to nonprofit organizations and a free-lance writer.