Service Charities Seek Ways to Help Their Lowest-Paid Employees Get By

As a certified nursing assistant at a nonprofit rehabilitation center in central Maine, Helen Hanson helps patients with basic activities healthy people take for granted—eating, dressing, bathing, and going to the bathroom. Because the 46-year-old aide works second shift, she earns $10.80 an hour, a dollar more than the base pay for a nursing assistant at the center, and she often picks up extra hours on weekends when wages rise to $12 an hour.

Still, Ms. Hanson says that after she pays the bills each month, she barely has enough money left for groceries and gas, let alone to put money aside for an emergency.

“I keep crossing my fingers that nothing drastic happens with the house,” she says. “I just don’t have the money to do the repairs.”

Across the country tens of thousands of nursing assistants, child-care employees, home-health aides, group-home employees, people who work at after-school programs, and others provide vital services at health-care and human-services charities. The work is physically and emotionally taxing, yet because wages are so low, these employees face many of the same financial challenges as the people they serve.

Nonprofit employers say they want to pay frontline workers more but can’t because of low government-reimbursement rates and the challenge of raising money from donors to improve wages. With the economy so troubled in the last several years, recruiting and retaining low-wage workers has gotten easier for organizations. But some nonprofit officials worry that if the recovery picks up steam, finding people to fill demanding service jobs will become increasingly difficult at a time when more help is needed because the number of older Americans is growing so rapidly.

“At that wage level, you’re up against the fast-food industry,” says Angela King, senior vice president for aging and disability services at Volunteers of America. “You’re asking someone to provide compassionate, intensive personal care for the lady in the nursing home at the same rate that you’re asking somebody to take your order at the drive-through at the McDonald’s.”

Unearthing Benefits

Nonprofit employers are constrained by marketplace forces they don’t control, says Irv Katz, chief executive of the National Human Services Assembly, an umbrella group for social-service charities.

“If XYZ Nursing Home run by a nonprofit were to say, You know what, I’m going to increase our low-wage workers’ wages by 25 percent to bring them up to a living wage, they would have to cut services to do that,” he says. “So how many fewer patients are you willing to serve?”

Instead, the assembly has started a new program that helps charities aid low-wage workers by educating them about government benefits. Bridging the Gap features an online system that human-resource departments can use to screen whether employees and their families are eligible for the earned-income tax credit, children’s health-insurance programs, food stamps, or other government assistance.

Affiliates of Catholic Charities USA, Goodwill Industries International, and United Neighborhood Centers of America are now testing the program in four cities. So far, 220 employees have requested screenings, which have identified $100,000 in benefits for which they qualify.

Mr. Katz acknowledges that helping workers apply for government benefits is potentially controversial in the current political climate, but he says the benefits exist for people to use them, and people who qualify should get them.

Sheltering Arms Early Education and Family Centers, which provides child-care and support services to low-income families at 16 centers in metropolitan Atlanta, already provides that kind of assistance informally.

The organization emphasizes professional development for all its employees. For example, when assistant teachers who start with only a high-school diploma earn their child-development associate credential through the group’s training program, their wages increase from $7.50 an hour to $8.50.

But Elaine Draeger, the organization’s chief executive, acknowledges that it’s still not much money. “We help them get their CDA, and then we help them get food stamps,” she says ruefully.

Family-support coordinators at each center who help parents apply for aid programs are also available to staff members.

During tax season, for example, the group pushed to make sure both families and employees understood what the earned-income tax credit was and how to determine if they qualified.

Says Ms. Draeger: “Anything that we would do for our families, we would also do for our staff.”

2-Percent Bonus

Health-care and social-service nonprofits rely heavily on government contracts. Charity officials say the main reason they can’t pay workers more is low reimbursement rates—which, in recent years, have declined or remained flat, due to state budget gaps.

Volunteers of America Greater New Orleans employs more than 160 personal-care attendants who provide services that allow people with intellectual disabilities to live on their own. The average wage for those positions is $8.70 an hour.

In 2006, Louisiana increased its Medicaid reimbursement rate to $16 an hour, which allowed the charity to increase wages to their current rate, says Jim LeBlanc, head of Volunteers of America Greater New Orleans. But the state has since lowered the rate to $14.68.

In addition to covering the attendants’ wages, the charity uses the reimbursement to pay for workers’ compensation and liability insurance, supervisors to oversee the attendants, and other program costs.

Workers do not currently receive health insurance, but Mr. LeBlanc is already anticipating that the charity may have to provide it in 2014 under the new federal health-care law.

“The social worker part of me says, ‘Well, we need to be able to provide the health-care benefit,’” he says. “The businessman part of me says, ‘How in the world am I going to do that? We can barely cover our costs now.’”

Some charities have experimented with bonuses as a way to increase employees’ take-home pay without committing to permanent wage increases.

In 2010, Cedar Sinai Park, a charity in Portland, Ore., that runs a nursing home and an assisted-living facility as well as providing other services for older people, didn’t feel confident enough in the economy to provide annual raises.

Instead, the nonprofit said that if it met its quarterly financial goals, all employees would receive a 2-percent bonus.

“It wasn’t huge,” says David Fuks, chief executive of Cedar Sinai Park. “But the reality is if that 2-percent bonus for a low-wage worker turns into an extra $300 or $400 at the end of a quarter, that’s a very nice thing to have happen.”

Nonprofits have long struggled to recruit and retain low-wage employees, but during the recession that pressure eased. In an uncertain economy, workers were reluctant to leave their jobs. Now some charities are starting to see signs that the reprieve is coming to an end.

“One of my indicators that the economy is getting better is our turnover is going back up,” says Brad Galin, senior director of human resources at Stone Belt, in Bloomington, Ind. “People are able to get positions that are paying more.”

Disruption for Clients

Out of the 500 people who work for Stone Belt, roughly 420 are hourly workers; most provide assistance to people with disabilities.

Wages range from $8 to $12 an hour. In 2010, the organization’s turnover rate was about 24 percent, but it is now approaching 30 percent. The number of applications for open positions has also declined.

Higher turnover translates into additional hiring and training costs for the charity and disruption for clients, says Leslie Green, Stone Belt’s chief executive.

“One of the major indications of quality services for the client is the relationship with that direct-support person, someone who knows them well, who understands their likes and dislikes and their skills and abilities,” she says.

“When a person turns over, that new individual has to come in and start over again establishing that relationship with the client.”

Five years ago, Goodwill Industries of the Chesapeake, which often hires people who graduate from its job-training programs, started a drive to make the nonprofit a better place to work—and try to cut a 70 percent turnover rate.

In addition to offering tuition benefits and starting a wellness program, the Baltimore charity hired two financial counselors who help employees navigate debt management, household budgets, retirement planning, and how to avoid foreclosure.

Goodwill Industries of the Chesapeake credits the new efforts with bringing its turnover rate down to 29 percent.

The nonprofit recently hired a talent-development manager to work with all employees to create professional-development plans to help them move up.

“Turnover is very expensive,” says Lisa Rusyniak, the group’s chief executive. “We want people to continue to grow within the organization so that we have bench strength.”