The Importance of a $15 Wage Floor for New York’s Nonprofits
August 17, 2015. This op-ed by James Parrott, FPI’s deputy director and chief economist, and Jennifer Jones-Austin, CEO and executive director of the Federation of Protestant Welfare Agencies, appeared in City & State.
New York’s leaders should build on the historic recommendation of the Fast Food Wage Board appointed by Gov. Andrew Cuomo and begin moving toward an across-the-board $15-per-hour wage floor. A growing number of major cities around the country have already enacted, or are considering, a $15 floor. Legislation has been introduced in Washington for a national $15 wage floor by 2020, and several states are also moving in that direction. People are waking up to the fact that years of wage stagnation for most workers has unfairly limited opportunities for millions and hampered economic growth.
The 250,000 workers in New York’s nonprofit sector providing essential human services under government contracts deserve a wage boost. Over 80 percent of these workers are women, most are not represented by a labor union, and nearly two-fifths have at least a 4-year bachelor’s degree (twice the share as in fast food).
Yet half of this workforce makes less than $15 an hour. That’s not nearly enough to provide for basic family budget needs in any part of our state. Like fast-food workers, the earnings of many human services workers are so low that they qualify for public assistance.
There is one essential difference, however, between nonprofit human services and other low-wage workers: Since nonprofits provide services under government contracts, government needs to increase contract funding to enable nonprofit employers to meet a higher wage floor.
It makes good fiscal sense for the state to increase human services contract funding to raise the pay of low-paid nonprofit workers. High employee turnover will decline, yielding hiring costs savings and improved service quality. After all, many of these government-funded services are intended to help low-income families get back on their feet and to better care for their children and other family members. Improved delivery of these essential services will save taxpayers in the long run, as will the reduced use of public assistance by nonprofit workers.
New York City is already making significant progress toward an increased wage floor. Under Mayor Bill de Blasio’s initiative, the city took an important first step in this direction in its fiscal year 2016 budget when it increased funding of human services to enable nonprofit contractors to provide their workforce with an $11.50-per-hour wage floor, a level influenced by the lowest pay step for direct city employees. The Career Ladder Project, spearheaded by the Federation of Protestant Welfare Agencies and the Fiscal Policy Institute, is continuing to work with the city to raise this wage floor to $15.
The recent city budget also included a 2.5 percent cost-of-living increase, the first since the start of the 2008-09 recession. The Human Services Council had pushed for a greater cost-of-living increase to make up for several years of human services budget cuts.
At the state level, there have been modest cost-of-living increases for the past two years but nothing has been done to establish a wage floor for nonprofit service workers that is higher than the current state $8.75 minimum wage. The Federation of Protestant Welfare Agencies and the Fiscal Policy Institute are committed to building a statewide coalition to push for and fund a $15 wage floor.
Many family, youth and senior services are provided by nonprofits under county contracts. However, in recent years when hardships have increased and poverty has risen in many parts of New York, the funding for state and county human services has been reduced. Because counties are limited by the property tax cap, the campaign will seek to have the state increase assistance to county governments to support a $15 wage floor in local human services contracts.
The Fast Food Wage Board reached the right conclusion. Now, it’s up to Cuomo and the Legislature to affirm the positive value of a higher wage floor by broadening the benefits of a better wage for all workers, and to provide the contract funding so that dedicated nonprofit workers providing critical human services are able to share in these benefits.