Rick Cohen: US non-profits are in a bind over the minimum wage

They are not uniformly in favour of minimum wage legislation, writes our US columnist

Rick Cohen
Rick Cohen

The federal minimum wage in the US is a measly $7.25 an hour, but states and cities can set the figure higher – and 29 states and some large cities, including Seattle, San Francisco, Chicago and Washington, DC, have done this. The latest is Los Angeles, but a number of non-profits - and, surprisingly, labour unions – have asked for exemptions.

The higher minimum wage of $10.50 an hour starts in July 2016 - rising to $15 by 2020 – but non-profits can delay implementation by a year. $10.50 equates to a gross annual income of $21,840 – barely above the federal poverty level for a family of three. A number of LA non-profits that train workers to re-enter the workforce and provide counselling and educational services argue that the higher minimum wage will force them to cut back programmes and lay off trainees.

Politically conservative opponents of higher minimum wages often use non-profits as a "front man", according to Jan Masaoka, executive director of the California Association of Nonprofits, but in fact most non-profits, including most CAN members, support the minimum-wage hike. However, CAN advocated for the longer lead-in time for non-profits so that they might renegotiate government contracts on their labour reimbursement rates.

But a number of non-profits have expressed reservations about the minimum wage. Of 34 members who responded to a survey of the Nonprofit Association of Oregon and took a view on a $15-per-hour minimum wage, 11 said they were opposed. Of more than 130 survey respondents, regardless of their position on the minimum wage, only 10 said they would absorb the wage increase with little problem. Overall, non-profits favour a higher minimum wage as a step toward reducing social inequities, but are sometimes tepid in their public support because of concerns about the effect on their own payrolls.

If non-profits are lukewarm, the signal from organised labour in LA is downright contradictory. The latter vigorously supported the $15 minimum wage, but then the Los Angeles County Federation of Labor, the local affiliate of the AFL-CIO, argued that workplaces covered by collective bargaining agreements should be allowed to opt out. The result would be that unionised workplaces would be exempt from the higher minimum wage, but non-profit employers - which are mostly non-unionised - would not have that option.

Rick Cohen is national correspondent for the Nonprofit Quarterly in Boston, Massachusetts

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