Many nonprofits in New Jersey employ staff based on contracts awarded by the state. If contracts remain stagnant, charities will suffer - and ultimately, the people served by them will also suffer.
By Dave Fried and Roy Leitstein
When voters in New Jersey passed a constitutional amendment to increase the minimum wage annually based on the Consumer Price Index in 2013 it set into motion a series of triggers that could ultimately destroy nonprofit organizations throughout the state.
The newest proposed legislation to increase the minimum wage from $8.25 to $15 per hour, simply stated, would doom nonprofits unless the long-term contracts between the state and those organizations are increased.
Most nonprofits would like nothing more than to pay all of their staff $15 per hour -- or more. They simply cannot afford to. The rates previously established by contract for most services did not factor in the rate of pay for direct care staff at $15 an hour.
Without the state's blessing to increase the contractual wages paid to these employees, nonprofits will go out of business and innumerable at-risk individuals will no longer get the often life-saving assistance they need.
The contract pay rate is non-negotiable and is typically established by the government. That rate does not change unless New Jersey allocates the adjustment, which then must be approved by the legislature as part of New Jersey's annual budget.
The problem is the state of New Jersey, despite the highest property taxes in the nation, is broke.
There are some 30,000 501(c)(3) nonprofit organizations employing 314,000 people in New Jersey, or nearly 10 percent of the state's private sector work force. Those nonprofits are responsible for approximately $35 billion in annual expenditures toward the New Jersey economy.
Hainesport-based Legacy Treatment Services, for example, employs over 800, serves a client base of 15,000 annually and has an operating budget of just over $50 million dollars. Each year Legacy spends that revenue in 14 counties throughout the state to help deliver on its mission to change the social service outcomes for people of all ages from surviving to thriving.
Robbinsville Township, for example, has several group homes integrated into its community and is equally dedicated to the mission. Robbinsville also firmly believes in providing fair wages to its employees.
One does not need to be an economist, a public safety official or a substance abuse professional to see how this would impact almost every municipality in the state.
Nonprofit organizations will no longer be able to meet the needs of the most vulnerable and will ultimately force the closure of group homes and treatment centers. Such a calamity would thrust at-risk individuals onto the street, quite literally, which will lead to more homelessness, abuse, neglect, addiction, and unemployment.
Although we support an increase in the minimum wage, without a subsequent adjustment to the state's nonprofit contracts allowing more funding to cover that wage increase, the unintended consequences will be dire and something no New Jersey taxpayer could possibly afford.
Dave Fried is the three-term mayor of Robbinsville Township.
Roy Leitstein is the CEO of Legacy Treatment Services.
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