Low-Wage Workers and Nonprofits 6.1.09

Let's look at two uncomfortable facts:

1. Many, many jobs in the nonprofit sector are low-wage jobs: child care workers, intake workers, database clerks, nonprofit housing custodians, door-to-door canvassers, elder care workers, support staff in the arts, home health care aides . . . in short, a very large proportion of jobs in human services, in advocacy, in education, in the arts, and in health care.

2. While raising salaries would be, by far, the best way to support these important staff, doing so isn't possible for most nonprofits: certainly not in the short term, and often impossible for the long term given business models and funding constraints.

And, perhaps most uncomfortable of all for nonprofit leaders, the discussion about salaries and job retention has focused on the people at the top of organizations: the executive staff and program leaders. Think about how many articles you've seen on executive director retention and compensation (and we don't dispute for a minute the crucial importance of the executive director), and then think about how many articles you've seen on retention and compensation for low-wage nonprofit workers. (In fact, as many executive directors will attest, one of the most challenging parts of their jobs is recruiting and retaining high-quality staff in direct services and other low-wage, crucial-to-the-mission jobs.)

As the economic downturn deepens, the people in low-wage positions are often more vulnerable than their nonprofit supervisors. Low-wage workers too often comprise the very families and economically disadvantaged heads-of-households that nonprofits are seen to be caring for, rather than employing. Their spouses may have lost their jobs; their parents are less likely to have health insurance, they have less money saved, and so forth. "So many of our staff have spouses who've lost their health coverage due to being laid off or losing hours to where they don't get health insurance," commented the executive director of a Latino famiy resource center who asked not to be named. "The number of people on our health insurance has nearly doubled because of the recession."

There are a variety of definitions for what constitutes a "low-wage occupation," such as an occupation in which one-third or more of full time workers earn less than the poverty threshold for a single person. Not mincing words, Marcy Whitebrook of the nonprofit Center for the Study of Child Care Employment refers to child care worker pay as "poverty-level wages." Despite the different definitions, we'll use a composite measure of about $10/hour or lower.

Although the challenge of providing adequate compensation to low-wage employees may seem overwhelming, especially during a financial crisis, the fact is that nonprofits, consultants and funders can consider a number of helpful options without torpedoing the budget. The National Human Services Assembly -- an association of national nonprofits and thousands of member organizations -- decided to "turn the lens around for nonprofits to look at themselves" in the Caring Workplaces Initiative. We applaud these efforts, and we've incorporated some of their ideas with those from other sources:

Steps to take relatively quickly at little or no cost

* Temporary or episodic flex time: Many low-wage workers have to start and stop at specific times; the Alzheimer's Center has to be open when the day care participants show up. But many nonprofit professionals take for granted that they can leave the office for a couple of hours to go to the dentist, a parent-teacher conference, or to take an elderly parent to the doctor. Have supervisors talk with their non-exempt staff to figure out ways to allow them to have some of the same flexibility.

* Help staff by giving them paycheck options: for example, weekly payroll provided in cash envelopes and/or via direct deposit into their checking accounts. Many nonprofit low-wage workers are forced to use payroll check-cashing services and payday loans that exploit their need for fast cash on paydays. "It didn't even occur to me that some of our employees were using those paycheck cashing services," said one nonprofit finance director who asked not to be named. "But our bank screwed up once and bounced our payroll, and I found out because those services came after us for their money. It's a lot more trouble to do cash payments for people who request it, but we're going to do it."

* Help staff make fuller use of benefits your organization already provides. Many staff may be unaware of Employee Assistance Program (EAP) benefits such as mental health counseling, referrals to substance abuse treatment programs, and so forth.

* Help employees access government and community resources. Some staff may be unaware of how they (or their relatives) can apply for food stamps, for respite care (for caregivers to the elderly, children with disabilities, for example), for free after-school programs, community health and dental clinics, immigration legal help, and so forth. A neglected resource for low-wage staff is the Earned Income Tax Credit; a useful resource is Helping Eligible Employees and Clients Access EITC Toolkit for Nonprofit Agencies.

Funders: As part of a discussion with a prospective grantee, ask about salary levels in non-exempt positions, and talk about increasing your funding by an amount that would go directly to increasing salaries at those levels.

Intermediate steps

* Offer a cafeteria plan instead of specific benefits. Some of your staff with military service backgrounds may receive free health care through the Veterans Administration. Others may obtain healthcare through their spouses or Medicare. These and others would be able to use the health insurance benefit funds for child care costs, life insurance, or other costs.

* Have a discussion about low-wage staff on the management team. Often people who work for management team members make significantly more than people in comparable-skill positions who work in direct services, simply because management team members are more aware of the salary needs and skills of the people with whom they work directly. Look at the non-exempt positions across your organization and see whether they are in line across departments, and across direct services/administration.

* Follow the example of Goodwill Industries in Baltimore and conduct an anonymous employee financial assessment survey. Based on what they learned, they brought in debt counselors, people to assist with opening bank accounts, help applying for food stamps, and other free resources.

* If you can't provide raises for all staff, make sure you provide them for the crucial-to-the-mission low wage staff who are difficult to replace. It may be possible in this downturn, for instance, to announce wage freezes for exempt staff but small wage increases for direct service, non-exempt staff: it sends an important message and both makes business sense and raises morale.

* If you are a board member, ask for a presentation on the number and types of positions that are non-exempt and/or direct service and what wages are earned in those positions. Work with staff to provide some comparables so that you can see whether you are paying less than other nonprofits for these positions, the same, or more. The issue is probably not related to competitiveness; the issue is more likely to be the deeper societal probem that these positions typically command neither respect nor good pay. Think about taking a small step to address these issues . . . for example, see whether you can consider something like making a four year commitment to raise non-administrative, non-exempt salaries by 7% over the four year period.

Consultants: when when working on strategic planning or business models with nonprofit organization clients, raise the issue of low-wage workers and what strategies can be built into the plan to raise wages at those levels.

More far-reaching steps

* If you are a contractor with the county, work with other nonprofit county contractors and your elected officials to get increases in contracts for low-wage workers. Such increases are seldom made for one organization, but pressure from multiple contractors (including their board members) can be effective.

* If you have a number of people in a particular low-wage position - say custodians in an affordable housing organization - take an informal poll of similar organizations nearby and see what they pay and what benefits they provide. If you call them and promise to share the results but keep the organization names confidential, most organizations will be glad to participate. Make a commitment to meet the median level of pay or benefits or strive to reach a pay level of 30% above the median.

* Raise the issue within the associations and networks to which you or your organization belongs. Suggest a survey, an official stance, an opening of discussions with contractors and funders. Everywhere you go, look for opportunities for joint calls to action.

The business case for supporting low-wage employees

Both mission impact and financial impact are positively affected by supporting low-wage staff. Absenteeism and turnover are expensive to community nonprofits, and both can be reduced by following some of the suggestions outlined in this article.

As Caring Workplaces member Jim Gibbons of Goodwill Industries International says, "Individuals are more likely to be able to go to work, continue working, and advance their careers and earnings if their home lives are stable and their children are safe and thriving." People in human services have always known this; in this economic climate of widespread visible suffering it may be easier for us to grasp the importance of applying the principle of supporting families to our own staffs.

And Natalie Thompson of the National Human Services Assembly comments that while nonprofits are used to thinking about strengthening families of clients, they may not be aware that some of their own employees may be in the same economically vulnerable situations.

As for the larger picture, Carol Day of the National Black Child Development Institute spoke with Blue Avocado about child care workers, but she could be talking about all nonprofit low-wage staff: "Low wages take a toll on the nonprofit and the worker and the child. We need to recognize the full costs of high-quality child care, and that means better wages for the people who have responsibility for the growth and development of children at a critical stage in their lives." Amen.

-- Jan Masaoka

See also:

Comments (15)

  • I'm glad someone is bringing this up, finally. I appreciate the ideas in the article, but the truth is that no organization (for-profit or non-profit) should be paying employees less than a living wage. Until we non-profits commit ourselves to modeling the type of world we (supposedly) want to see, we are part of the problem.

    Jun 01, 2009
  • yeah, well that would be nice. (Didn't mean to sound unkind...) That was just a comment, you're are exactly right. But, look at some of the other roots of the problem.
    Has anyone ever looked at your funders' 990s and see how much they spent on salary, benefits, office supplies, infrastructure, nice furniture? When you do it's always curious that some of them seriously underpay their grantees' staff and expect them to perform miracles in their McGyver office with two rolls of duct tape, slow computers, and bootleg software.
    How about huge government agencies with bloated expenses that won't pay Indirect Costs? This always puts you on the brink of bankruptcy.
    My point, (which is not well-written, forgive me) is yes, we do need to keep trying and trying, but we don't always control our own destiny in the short-term.

    Jun 01, 2009
  • Thoughtful commentary, but given the current economic crisis in the country, I think many of these suggestions will have to be put on the back burner. Also, the definition of a "living wage" can vary depending on the location in the country. Who will define that? Everyone should give pause to who they vote for next time at all levels of the government. Social engineering, unions, and excessive taxation have driven this country down its current path, aided and abetted by elected officials, many who do not have the foggiest idea of how the economic system works. If the business sector doesn't make it, the country doesn't make it. If you over tax and over regulate business you diminish the capacity to hire, and pay a "living wage" and benefits.

    Jun 01, 2009
  • Anonymous

    Hogwash. Sure "living wage" might vary, but you're seriously disputing $10/hr? And "social engineering, unions and excessive taxation" are the 'problem'?? And that "if the business sector doesn't make it, the country doesn't make it"?? You are delusional. It's DE-regulation that has "diminished the capacity" to pay living wages, because too many businesses care nothing more than profit-making (as enshrined in law, which should be immediately repealed). Not meaning to over-simplify the matter, but Fair Trade is a good model to look at if you really cared about low-wage, non-profit workers (which I think you do not, hence I am baffled by your response to this article in the first place).
    Educate yourself at http://www.toomuchonline.org, or http://www.propublica.org, or http://www.corpwatch.org
    (Note they all have 'org' as an extension, not 'com')

    Jun 02, 2009
  • Come on folks, it's time to take the high road. Investing in your front-line, direct service staff is the best investment you can make. Nonprofit organizations should not be paying poverty-level wages without benefits.
    It's about priorities. Beginning to prioritize the people who make our missions possible can happen in any economy, in both the small ways that the article suggests, and in long term investments for the future.

    Jun 01, 2009
  • It's great to consider compensation in such crappy financial times because it is, for that very reason, more relevant than ever.
    About five years ago a very wealthy donor inquired about our compensation practices. "Are your employees well compensated?" she asked. I did not know her opinion on the issue, but I was really clear on mine. I shared that I felt it was my responsiblity to provide at least living wages to those receiving the least compensation. If our goal is that of making better community, then our responsibility starts with those that put that mission into action in our organizations. Is it not at least inconsistent that we look to care for those we serve through our mission and not care for those who execute that mission?
    Yes, it is easier said than done if you are not there. But, once there, there are other things become easier: retention rates increase, employee moral can be improved (if for just a period of time), values are more universally alligned, and we make better community beyond our mission.
    To challenge a prior comment, don't put this one in the back burner. And don't look to solve it yourself: challenge your senior staff, your board, your supporters, and your community.
    As for our weathy donor; she never concurred or disagreed with my response. To this day she continues to be a very generous supporter of our mission.

    Jun 01, 2009
  • I am glad to see a spotlight on this issue.
    One issue that is significant in my experience is funder ignorance and/or explicit rejection of higher wages for direct-service staff. There is a strong underlying assumption in our culture that nonprofit work is by itself morally virtuous, and you shouldn't expect a high salary on top of that.
    I have repeatedly failed to find a calm, approachable way to encourage funders to change their assumptions on this front. When I hear somebody justifying why a receptionist position that requires multilingual skills and ability to deal with clients in crisis doesn't "deserve" more than $19,000 a year, or saying that "the market" won't support more than $7.25/hour for a daycare worker, it makes me want to shake them. When you're the funder, you're PART of the market.
    Amanda (comment signed because the software seems to want to post as "Anonymous")

    Jun 03, 2009
  • Anonymous

    preach it to the choir! I'm completely nauseated by the way non profitrs treat their lower wage employees. I was actually told by the higher earning staff, That the Director has save us. meaning minorities. " The Worst crime is the one that the government supports"

    Jun 07, 2011
  • I've worked as the lowest and highest paid member of a nonprofit. Too often I've seen talented coworkers leave a job because the pay is too low. The loss of talent hurts organizations.
    We need a shift in thinking about nonprofits. There are a lot of people who think it's okay to pay poverty wages and that nonprofit employees can't cut it in the private sector. Both of these beliefs are very wrong.

    Jun 03, 2009
  • I appreciate this article and am especially glad to see the ideas on non-salary items that can make a big difference in the lives of our non-exempt employees. The process of truly valuing employees begins with talking with them about what they need and how we can help. Organizations that avoid "eye contact" out of embarrassment over their financial limitations are making a huge mistake.

    Jun 10, 2009
  • I too am pleased that some attention is being paid to this very important issue. Although I certainly agree that many nonprofit employees are seriously underpaid, I would have liked to see a bit more emphasis placed on some of the non-monetary ways to attract and retain good employees.
    Some examples from my own experience:
    1. When I had my daughter, my then-supervisor at an arts nonprofit allowed me to bring the baby into the office with me on a part-time basis and do the rest of my work from home. When the baby grew too old for that to be feasible, my husband's employer (a state university) allowed him to stay home with the baby for two half-days per week while I went in to the office. Eventually I transitioned back to full-time in the office, but because of my and my husband's employers' willingness to be flexible, we saved a TON of money on infant care, which as many of you know is very expensive. And we both got to spend lots of time with the baby during her first year of life, and it kept me loyal to that particular employer for longer than I probably otherwise would have been. And all the work got done.
    2. When my family was moving to another state because of my husband's new job, my supervisor at a health/human services nonprofit employer agreed to let me keep my current job on a telecommuting basis, at least temporarily, to see how well it'd work. More than a year later, it's still working very nicely and I've just signed a contract for another year. They save money because I am working fewer hours, I get the flexibility of working from home, and we save money b/c we no longer pay for full-time child care and other expenses.
    My experiences were somewhat unique, I know - not everyone can realistically bring their baby to work, for example, or do all their work from home - but my point is that employers tend to think that "compensation" is all about money. Money is lovely and it's important, and there's no excuse for paying people low wages for important work done well. But there are other forms of compensation, if we're all willing to think beyond paychecks and consider things like convenience and building goodwill and loyalty among one's employees. The example given in the article re: paying people on a weekly basis, and/or with cash or via direct deposit vs. with checks, is a good one - saves the employees the exhorbitant fees charged by those check-cashing places, for which they'll undoubtedly be very grateful.

    Jun 15, 2009
  • According to Current Population Survery estimates for 2002, some 72.7 million American workers were paid at hourly rates, representing 59.6 percent of all wage and salary workers.
    The proportion of hourly-paid workers earning the prevailing Federal minimum wage or less has trended downward since 1979, when data first began to be collected on a regular basis.
    Dan Abr

    Oct 21, 2009
  • The researchers said one of the most surprising findings was how successful low-wage employers were in pressuring workers not to file for workers’ compensation. Only 8 percent of those who suffered serious injuries on the job filed for compensation to pay for medical care and missed days at work stemming from those injuries.

    Oct 22, 2009
  • We need a shift in thinking about nonprofits. There are a lot of people who think it's okay to pay poverty wages and that nonprofit employees can't cut it in the private sector. Both of these beliefs are very wrong.

    Oct 26, 2009
  • I'm glad I'm not the only one who believes that you needn't live in poverty in order to work against poverty. I've been on a crusade against the imposed martyrdom of non-profit employees. To voice the opinion that we should be paid at market value for our professional services is viewed by some as working against the mission. Self-Righteousness Syndrome (SRS) is a nonprofit disease. I believe that enhancing the little things will go a long way toward's employee loyalty. For example, in my organization they only pay 40.5 cents per mile reimbursement even though the IRS standard is 55 cents. In my small organization the total budget impact over a year would be hundreds, not thousands, of dollars. But the message to the employee who uses their own vehicle for the good of the organization would be that they are respected for their work and their sacrifices. Given the cost of gas alone, 55 cents would just barely cover one's expanses. Penny wise and pound foolish - that seems to be a nonprofit standard.

    May 11, 2010

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