Key Challenges

Vendors Can’t Meet Requirements: There may not be sufficient suppliers or service providers able to comply with the requirements, and the organization will not be able to purchase the goods and services it needs to operate and serve the public.

Build on past performance: Based on our assessment, during the last fiscal year x% of our subsidized wage dollars were used to reimburse wages for jobs below the living wage standard. To ensure that we continue to provide these opportunities for program participants and continue spending funds, we will use the following strategies to address this risk:

• Communicate early and often with our suppliers about this change
• Use a phased approach in rolling out the changes
• Bring new suppliers into our network
• Provide an ongoing engagement mechanism for suppliers and subrecipients to address challenges or concerns
• Regularly assess trends in wages to ensure that the policy remains current

Disadvantages for Small Businesses: It will be too costly to implement for small businesses.

There is ample evidence that fair wages improve employee engagement, retention and quality of work, which all improve an organization’s bottom line. While a collective increase in labor cost may seem like a shock to the bottom line, studies show that employers are able to absorb the cost of wage increases through worker productivity and lower administrative and turnover costs.

Out of Scope: As long as employers are complying with federal, state and local minimum wage requirements, influencing wages is considered out of scope.

Minimum wage laws have not kept up with cost of living since the 1960s. If we are going to subsidize wages with taxpayer funds, these businesses need to pay a living wage so that the participants they are hiring from our program can pay their rent, keep their lights on and put food on the table.

Increases Total Costs: Funders see paying a living wage as a drawback as it increases the total cost of the program.

Reframe the challenge into a strength. In grant applications, for example, share that you support good jobs for all workers, including your own, and that is a key ingredient to achieving good outcomes.