Non-profits and charities brace for impact of minimum wage hikes

Much of the minimum wage discussion surrounding the “Fight for 15” has remained focused on workers in low skill jobs primarily found in retail sales and the fast food industry, and rightly so. They account for a huge segment of those currently earning at or near the minimum wage. But there’s another employment area which will feel the pinch just as hard and that’s the charity and non-profit slice of the economy. Here in New York the new minimum wage hikes are on the way, thanks to the state’s Democratic ownership, but the local press has been interviewing leaders of some of these non-profit groups and they see hard times coming fast. (Press Connects)

Thirty-two employees are at or near the current minimum wage. As she prepares her September to August 2016-2017 budget [Chemung Valley Early Child Care executive director Joy] Overacker is going to have find a way to cover thousands of dollars in extra payroll and benefit costs.

Based on the formula enacted, the minimum wage in upstate will rise from the current $9 an hour to $12.50 an hour on Dec. 31, 2020, in yearly 70 cent increments starting on Dec. 31, 2016

“It’s a huge problem,” Overacker said. “I must balance my personal beliefs that people should be paid a living wage against the reality of balancing a budget and they don’t mesh very well.”

Overacker has plenty of company. Nonprofits across the state, many budgeting on a shoe-string, must figure out how to cover the higher minimum wage when revenues are, at best, flat. Raising fees, cutting programs and personnel, reducing employee benefits and other measures are being considered in the wake of the minimum wage increase.

One of the first responses I saw pop up from a few liberals in the comments section of this article immediately blamed the non-profits and charities for paying their executives too much. And when Governor Cuomo was asked about the impact his new minimum wage law would have on these groups he pushed back by saying that people shouldn’t have opposed his proposed cap on non-profit executive salaries of $200K. In the high end of the charity game that is clearly a concern for some and the pay structure and overhead costs of charities should always be available to potential donors for their consideration. But in far too many cases like these local child care and community centers, big ticket CEOs are simply not part of the equation. Don’t try making that case to Rick Materese, the executive director of the Boys and Girls Club of Western Broome, or to Sue Dale-Hall, executive director of the Tompkins County Child Development Council.

“Nobody around here is making that kind of money,” Materese said, who salary was listed at $52,000 in the organization’s 2014 Internal Revenue Service filing. Dale-Hall’s salary was listed $74,300 in 2014 IRS documents filed by her organization.

Underlying the argument from the Fight for 15 crew is this rather stark reality. When the minimum wage gets jacked up, the people most hurt by it are not the “Fat Cat” business owners who “refuse to pay the masses a living wage.” They find ways to keep their companies profitable regardless. The real pain is inflicted on the minimum wage workers who lose their jobs and the people who rely on the services of these charities and non-profit groups. The irony here is that if you are working a low wage job and depend on a place like the Early Child Care Center featured here, your pay raise is going to be eaten up by the now increased cost of dropping your kid off at day care while you go to your job.

That doesn’t even take into account the rest of the prices which will be going up in response to your generous, state mandated pay raise, assuming you are lucky enough to remain employed. In the end, the Fight for 15 benefits the labor unions and scores points for Democratic politicians. The actual people it claims to support are the ones who wind up paying the price.