I have been watching, with interest and trepidation, the Baltimore City Council’s proposal to raise the minimum wage in the City to $15/hour by 2022. While I certainly understand the desire to “share the wealth” and to ensure a decent living standard, as several Council members have stated, I am very concerned about the unintended consequences of this well-meaning action – particularly on non-profit organizations.
Many of the negative effects of such legislation have been noted by opponents to this and similar legislation across the country. There is the concern that businesses will leave jurisdictions with a higher minimum wage for surrounding jurisdictions (Baltimore City’s wage will be over 30% more than in some surrounding counties). There is the concern that employers will have to lay off workers or reduce hours in order to afford the higher labor costs. There is the concern that businesses will pass along the higher costs to their customers by increasing prices or, as has already happened for restaurants in San Francisco, by adding a surcharge to the bill (which has resulted in lower tips for waitstaff, whose compensation relies heavily on tips). And there is the concern that smaller businesses will have to close because they will not be able to afford the increase (and, in fact, the Baltimore City bill gives them a longer period to meet the higher wage – but they still have to meet it in the end).
One negative consequence that I have not seen discussed, however, is the impact on non-profit organizations. I have served on the Boards of several non-profit organizations, and have provided employment counsel for others – many on a pro bono basis. This latter point is an important one – I have donated significant hours of my time to these organizations because they cannot afford to pay for legal services.
In my experience with these organizations, many of them operate very close to the margin – even those with multi-million dollar budgets. An unexpected or increased cost can make the difference between survival and closure. And, in this day and age when governmental services and funding are being cut – and cut again – these organizations provide incredibly valuable services, filling significant gaps in the needs of our communities. In Baltimore City, they provide resources for the homeless and addicted, the arts community, and students, among many other groups.
One such example can be found with arts in the public schools. As has been widely reported, in recent years as schools face decreased funding, the arts are one of the first areas to go. Many schools do not have a full-time arts teacher. Non-profit organizations fill this gap with supplemental arts instruction and experiences – and they bring creativity, imagination and wonder into the schools.
Interestingly, the Baltimore City bill implicitly acknowledges the impact on non-profit organizations – by exempting the Baltimore Zoo from the increased minimum wage during the terms of its lease with the City. Presumably an exemption is needed because of the negative financial impact this bill will have on the Zoo. But that is only one of the multitude of non-profit organizations in the City that will feel that negative impact. And ultimately, I am afraid that we will all suffer for it.