Until recent years, Minnesota had one of the lowest minimum wage rates in the nation. To keep up with the increased cost of living, in August 2016, the Minnesota statewide minimum wage rate was raised to $7.87 for small employers (under 100 employees), and $9.50 for large employers. Minneapolis, in October 2017, approved a Sustainable Wage with accelerated paths to reach $15/hr by 2019 for large employers and 2022 for small employers. The minimum wage in Minneapolis as of January 1, 2018 is $10 for all employers rising to $11.50 for large employers and $10.25 for small employers on July 1, 2018. In January 2018, St. Paul Mayor Melvin Carter III said in his inaugural speech that he will also create a Sustainable Wage Ordinance; he asked the St. Paul Foundation to commission a study with the Citizens League to study the unintended consequences of Minneapolis’ Sustainable Wage ordinances.
For those who have ever worked, or currently work in a minimum wage job, raising their pay to $15 sounds like a financial breath of fresh air. While it is of the utmost importance that an individual working full-time can afford to move out of poverty, organizations that focus their training programs to teens living in low-income communities or in communities of color may not be able to continue to provide either the quality of their programing or support the number of youth served. There are about 50 nonprofit youth development programs serving more than 6,000 youth each year in the greater Twin Cities area that pay youth while they receive training and wages. These are not just summer programs, most offer year-round training to youth 14-24.
The current Minneapolis Sustainable Wage ordinance contains a Youth Training Wage amendment, but one that might be restrictive to YSE programs:
Employers participating in a city-approved training or apprenticeship program may pay program placements under 20 years old a minimum wage training rate of no less than 85% of the municipal minimum wage for no more than the initial 90 calendar days of their employment. A list of approved programs will be posted on the City of Minneapolis website.
The training program criteria includes very specific training and data requirements which are similar to the summer curriculum of the Minneapolis STEP-UP Youth programming. This criteria includes a 90-day limit for youth training with a leap at the end of the 90-day training period from 85% to 100% of the prevailing city wage. These criteria may preclude youth from working in long-term training programs. They also require that all programs conform to the criteria outlined by the City of Minneapolis, and obtain approval and posting on the City’s website.
Nonprofit and philanthropic leaders are seeking an expansion of the Youth Training Wage in the Minneapolis ordinance, and are offering pro-active recommendations to the Citizens League, St. Paul Mayor, and St. Paul Council Members. A Youth Training Wage must indeed be a component of the Sustainable Wage ordinance. Common characteristics of nonprofit youth training programs serving youth ages 14-24 include a focus on building career competencies, nurturing soft skills, social emotional growth, a documented set of attained job skills, and evidence that youth are successfully working towards a career plan. However, holding all nonprofits to a 90-day training period when the entire program is a training program jeopardizes the programming costs and structure. As well, the 85% of the sustainable wage is not financial feasible without infusions of additional charitable dollars. A rise to 100% of the prevailing wages will challenge the existence of these programs.
Cookie Cart, with locations both in Minneapolis and St. Paul, is an example of a YSE non-profit youth training program that will be especially jeopardized by the Youth Training Wage as it is written. Cookie Cart is a non-profit bakery that provides teens with skills and experiences to benefit them as they enter adulthood and the working world. Not only do unskilled youth from low-income communities learn how to make cookies, about managing inventory and aspects of running a business, they have field trips to explore various career opportunities, and they get more connected in their community leading to relationships and references for the future. “About 60% of every youth wage supports youth skills development and exploration of career paths that are completely unrelated to baking and business.” says Executive Director Matt Halley. “The reason we are fine with this is that the program give youth the social and emotional (SEL) skills training that employers in our community want. We are in the business of baking bright futures.” Because programs like Cookie Cart do not function the way traditional businesses do, and focus on mentoring, skills building, and community learning experiences, the new Youth Training Wage does not serve their needs or mission.
Every $1 increase in hourly wage will cost Cookie Cart an additional $30,000 per year. This is a substantial amount of funding for a non-profit to obtain, and would mean having to make changes, such as cutting the number of teens hired, cutting the amount of hours worked, or increasing the amount of cookie sales, or, shifting its focus from baking futures to bakery sales.
Sundance Family Foundation has both programmatic and grantmaking experience with Youth Social Entrepreneurship (YSE) nonprofits that integrate practices of positive youth development with community engagement and social entrepreneurship to enable mutual transformation of economies, neighborhoods, and individuals. Sundance grants about $400,000 a year to support these nonprofits, coordinates tours, arranges Wunderkammers, and champions innovative supports. As a result of a 2-year collaboration with Wilder Research, 14 YSE nonprofits now have the documentation and evidence-based research necessary to prove that they are model youth training wage programs.
According to the Founder and Executive Director, Nancy Jacobs, “Sundance is advocating that a Youth Training Wage with a longer training period and a larger differential between the prevailing wage and the youth wage for certain identified programs be implemented both in Minneapolis and in St. Paul to allow these skilled nonprofits to continue guiding young people with technical, social, and emotional skills, and provide them opportunities to attain fulfilling careers with sustainable wages.”