We are committed to paying our staff more than a living wage. Your nonprofit organization should do the same.
The rally in front of New York City Hall was a familiar scene of speakers and placards denouncing the injustice of salaries close to the poverty line. The hundreds of workers gathered that day in March demanded a minimum wage of $21 an hour and a 6% cost of living adjustment – not unreasonable given the cost of living there -down.
What made this rally different was that the workers were not protesting against Amazon or other big companies. They were nonprofit workers seeking better pay from the food pantries, domestic violence shelters and foster care groups they serve.
In New York State, social service workers only earn 70 percent what their counterparts in government agencies are paid – not enough to survive in normal times, let alone during a period of runaway inflation. Given the demographics of state social service workers — 66% women and 68% people of color — the low salaries of nonprofits are fueling poverty and inequality in New York City.
The story of low salaries for nonprofit employees is not unique to New York. Nationally, nonprofits employ about 10 percent of the entire private labor force. This is 12 million employees — almost as much as the manufacturing sector as a whole. Many of these employees, with the exception of higher paid college and hospital workers, earn $4 to $5 an hour less in terms of total compensation than similar workers in private industry. In my home state of Massachusetts, a quarter of all adults on the Supplemental Nutrition Assistance program are full-time workers, and nearly 10 percent of them are employed by non-profit organizations.
Many factors contribute to the wage gap in nonprofit organizations. For some organizations, the use of donations or government contracts imposes a ceiling on employee compensation. For others, mission first means serving the cause even if it means sacrificing the financial well-being of the employees doing the actual work.
This is unacceptable, especially at a time when the nonprofit world is increasingly focused on the importance of aligning mission and human resources policies. But figuring out how to achieve this alignment is the trickiest part.
How we made changes
The organization I lead, the Center for Progressive Reform, faces similar challenges to many nonprofits, and we strive to provide decent pay and good benefits for our staff. We recently embarked on an effort to assess our compensation practices and to hold ourselves accountable for standing with our staff through difficult times. I believe that our experience can be instructive for other non-profit organizations.
Most of our employees live in high-cost metropolitan areas where housing and childcare weigh heavily on the family budget. Inflation made the problem worse. Despite solid annual salary increases averaging 4-5% per year, it was clear that some of our staff were struggling. Several talented employees left for larger institutions that offered higher salaries.
We have undertaken to fight wage erosion in three ways. First, our board has established a contingency fund to raise salaries this year just to help mitigate the impact of inflation. Staff received a $1,000 payment in the spring of 2022, which will likely be renewed in the fall if inflation continues throughout the year. The fact that we are a virtual organization with no head office costs – and no travel for our staff – allows us budget flexibility and lowers gas prices.
Second, we’ve improved our benefits package, including providing a modest stipend to offset internet or utility costs for people working from home. We have also added an extra week of vacation for all staff to take at the end of the year. And we now offer short and long-term disability benefits, which we consider essential, especially in the era of Covid-19. These changes meant a lot to staff without blowing our organizational budget.
Finally, the Center for Progressive Reform has made explicit and public our commitment to pay all of our staff more than a living wage. To achieve this goal, we broke out of our organization to partner with a group called living wage for usa, which certifies for-profit and non-profit organizations that are committed to paying living wages. (Disclosure: I supported the development of Living Wage for US in its early days.)
Drawing on its own research as well as analysis from the Economic Policy Institute, the group assesses the costs of living in specific regions of the country, including housing, food, education, childcare and health care. It then sets a salary and benefits standard based on where different employees live. This was especially important to us as our employees are dispersed across the United States.
To meet the salary and benefits standard, we have authorized Living Wage for US to conduct an individual cost assessment of living wage and all salaries and benefits for each staff member. Assessments are updated and shared with staff annually. Through this process, we found that while all of our staff received at least a living wage in terms of total compensation, our benefits package fell short. We’ve rectified that by adding new benefits, resulting in us being certified as a Leading Living Wage Employer – the first nonprofit in the nation to receive this designation.
Why is this important? Third-party certification is far more credible than any claims we might make ourselves. Our staff pride themselves on being a living wage employer, and the designation has already helped attract new people to our organization. Employees also know that if Living Wage for US finds that their compensation does not exceed their living wage costs, they can lobby for a raise or ask Living Wage for US to decertify us.
Understand the pressure on workers
Whether or not a nonprofit works with an organization such as Living Wage for US, it is important to understand the financial pressures staff members face. Can they afford decent housing and pay the grocery bills? Can they cover child care costs? Can they cope with an emergency or an unexpected event? Unless the answer is yes, nonprofits may be contributing to the problem rather than helping to solve it.
The benefits of paying living wages are clear. Absenteeism is down and morale rises. Families are more food secure, have access to childcare services and can save for unforeseen events. Employers improve their position with their clients and customers, and nonprofits have bragging rights to their donors.
Donors can also play an important role in ensuring that their funding enables recipient organizations to pay all staff a living wage – at a minimum. If the nonprofits they fund are not achieving this goal, they can come up with strategies, ideas, and most importantly, increased resources.
At a time when high inflation has made it harder for nonprofit workers to make ends meet, leaders in this field must recognize that staff undercompensation is a growing problem. The actions taken by my organization to improve our benefits and compensation have had significant positive effects. Our staff, board and donors are proud to live our mission and support our employees. In the end, isn’t that why we all got into this business in the first place?