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Raising minimum wage too quickly would hurt nonprofits (opinion)

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Sheila Bravo is president and CEO of the Delaware Alliance for Nonprofit Advancement. 

Raising the minimum wage in Delaware is a double‐edged sword for the state’s nonprofit organizations: helpful and potentially hurtful to their mission.

As employers, the nonprofit sector pays 11 percent of Delaware’s workforce, more than 45,000 people, according to the Bureau of Labor Statistics.  A 33 percent increase in the minimum wage in six months — from $8.25 an hour in May 2018 to $11 in January 2020 — is too much, too soon.

Nonprofits work with state agencies to provide critical services in local communities. They are paid for those services through contracts and grants. We have consistently heard from our nonprofit members that, year over year, those contracts and grants don’t keep up with the cost of delivering those services.

For contracts and grants awarded for FY 2019, members say they haven’t received more money to cover the minimum wage increase in June and one set for October. Most nonprofits, unlike retail businesses, cannot raise prices to offset those costs.

Nonprofits would need more public donations to cover those increases – or worse, be forced to reduce worker hours or eliminate jobs.

To be clear, nonprofit leaders support higher wages, for their employees and the clients they serve. A higher minimum wage can be a boost to people who turn to nonprofits for help.

A conversation about raising the minimum wage should include nonprofit employers who are affected by these decisions, including the rate and pace of the increase. Research is just emerging from areas that raised rates two years ago and can provide insight on those unintended consequences.

Any decision to raise rates should have a corresponding requirement for state government to increase contracts and grants.