Raising the minimum wage has a TRAGIC side-effect no one is talking about…

The entire minimum wage debate has focused on the livelihood and employment prospects of those in retail, food service, and other low-skilled low-pay jobs. And why wouldn’t we? They’re the majority who will either see their incomes rise or find themselves heading to the unemployment line, as those bearing the unintended consequences undoubtedly will.

There’s another group of employers known for low pay, but nobody is complaining about it. In fact, even most liberals would probably acknowledge that forcing these employers to spend a larger percentage of their budget on labor would divert from their mission. I’m of course speaking about non-profits.

By increasing the costs of operations of non-profits, the wage hike is paid for not by increased prices like a business would, but reduced services to the poor or whatever group that non-profit seeks to help.

A recent report by USA Today’s “Press Connects” appropriately titled “Nonprofits fear the impacts from minimum wage increase” highlighted the challenges just one non-profit is facing in New York:

Joy Overacker faces a gut-wrenching dilemma.

As executive director of the Chemung Valley Early Child Care and Learning Center she must figure out how to pay for the recently-approved New York state minimum wage increase.

Thirty-two employees are at or near the current minimum wage. As she prepares her September to August 2016-2017 budget Overacker is going to have find a way to cover thousands of dollars in extra payroll and benefit costs.

Based on the formula enacted, the minimum wage in upstate will rise from the current $9 an hour to $12.50 an hour on Dec. 31, 2020, in yearly 70 cent increments starting on Dec. 31, 2016

“It’s a huge problem,” Overacker said. “I must balance my personal beliefs that people should be paid a living wage against the reality of balancing a budget and they don’t mesh very well.”

Overacker’s non-profit is literally a non-profit, often operating in the red and rarely in the black. She’s hardly an isolated example:

An October survey of New York Council of Nonprofits, an Albany-based trade organization, indicated that the financial viability of 49 percent of the nonprofits would be threatened by a minimum wage increase.

And the scary part? They’re the lucky ones. The recipients of charities — veterans, the homeless, hungry and needy children, animals in shelters — how will they fare? They’re the ones who stand to lose the most if non-profits must close.

Let’s see how it plays out in California once they’re facing a minimum wage of $15 an hour. Businesses are fleeing the state already – will nonprofits be next?

[Note: This post was authored by Matt Palumbo. Follow him on Twitter @MattPalumbo12]

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