Los Angeles and Nonprofits’ Minimum Wage Goal: A Paradox

As a volunteer at Chrysalis, Moira (right) assists with practice interviews and resume writing for prospective job applicants. (Chrysalis)

Nonprofit Chrysalis is at a crossroads when it comes to minimum wage. For over two decades, the group has focused on providing transitional job opportunities for homeless and low-income people whose lack of education, insufficient work experience or substance abuse history prevent them from getting jobs elsewhere.

They want to lift themselves out of poverty — and that’s exactly what city leaders want to do for Angelenos. But raising wages for the 200 transitional employees at Chrysalis would cost the organization about $2 million, money that could be used to provide jobs for its struggling clients, said the group’s president and CEO Mark Loranger.

Loranger recognizes value of good pay and a permanent employment. “Having a real job that pays decent wages is what will help people get out of poverty,” he said.

Chrysalis arranges businesses or government departments to hire its clients to clean up streets, work in construction or perform administrative work for a period of six to twelve months as a way of building work experience. These temporary employees receive the state minimum wage of $9, and a minimum wage increase would require them to raise it by at least $4.25 an hour.

Chrysalis’ 85 permanent staff members are currently paid about $13 to $14, the lowest paid being supervisors of the transitional employees, Loranger said. He explained that he does not oppose the wage hike for the non-profit’s permanent staff, but doing so for the transitional employees would require the group to charge more for its customers to hire the employees, as well as raise more money through philanthropic efforts. He says it’s not realistic to “expect my organization to go out and raise $2 million philanthropically.”

Loranger says most of the council members have been sympathetic towards the nonprofits’ concerns, especially for Chrysalis, which has the unique challenge of transitional job services.

Council members such as Bob Blumenfield, Mitch O’Ferrell, and Felipe Fuentes have supported giving more time to increase pay for nonprofits that don’t have a wide gap between the highest paid employees and those making less than the proposed minimum wage, according to L.A. Times. They have proposed that programs that help disadvantaged workers enter the job force be allowed to pay trainees a lower wage for a limited period.

The California Association of Nonprofits, which represents about 9,500 members across the state, supports the minimum wage increase. The group performed a survey among its members and found that 77 percent of the respondents supported the increase. About 25 percent reported paying at least one employee minimum wage, but about 60 percent said that an increase would not affect their organization, said policy director Nancy Berlin.

However, groups that provide essential services such as child care and developmental disability care would be severely impacted.

“Many of these organizations are very dependent on the government money, so when the minimum wage goes up, it doesn’t necessarily mean the government funding goes up,” Berlin said.

Hike Mkhoian delivers supplies to homeless shelters and hosts events for women’s shelter through his charity, appropriately named Hike It Up. The Studio City-based nonprofit currently doesn’t pay any of its employees, but Mkhoian supports a minimum wage increase for organizations.

The founder is ready to move on to Hike It Up full-time after 20 years of teaching, but the group’s funding has to reach over $100,000 for him to start receiving a salary. He supports the minimum pay raise for nonprofit workers, especially ones that pay its executives millions of dollars in salary.

“If you already pay your employee minimum wage, that means you have something to fall back on,” Mkhoian said.

Councilman Paul Krekorian expressed concern about the likely impact on the nonprofits’ budget plan as a result of adapting to a higher wage.

“Those nonprofits that are providing lifesaving services to people are going to provide fewer of those lifesaving services if they have to pay more in wages,” he said at a past hearing on minimum wage, as reported in the L.A. Times.

Krekorian, who supports a minimum wage increase, says council members are discussing an option that would benefit both the workers and the city economy.

“Right now, the city council is in discussions about how to best accomplish that in order to benefit working families and encourage economic growth throughout the city. I’ll be happy to discuss it in greater depth as we get closer to adopting a policy,” he said in a statement.

William Crookston, Professor of Clinical Entrepreneurship at USC, believes allotting more time for non-profits to comply will allow better planning. But the groups won’t be able to see the full financial impact until employees resign farther down the line and more changes occur, Crookston said.

Berlin emphasized that giving nonprofits excessive time to bring up their wages would hurt them more than help them. She estimates that nonprofits would need between six months and two years, but anything longer will make charity workers fall behind other for-profit markets and turn the nonprofit industry into a low wage sector.

“At that point, it would be more advantageous to go work at McDonald’s than to be parading child care,” she said.

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