CALIFORNIA
First & Spring

Homeboy, other nonprofits fear wage hike will lead to program cuts

Labor leader opposes Councilman Cedillo's plan to partially exempt Homeboy, other nonprofits from wage law

L.A.'s elected officials and their political staffs are a frequent presence at Homeboy Diner, picking up sandwiches or holding meetings at the cafe that operates on the second floor of City Hall.

The eatery, part of Homeboy Industries' well-known anti-gang program, opened four years ago to great fanfare. At the time, then-Mayor Antonio Villaraigosa praised the nonprofit group for finding work for onetime gang members and former convicts struggling to reenter society.

These days, Homeboy staffers have been making their way up to City Hall's third floor, where council members have been debating a plan to hike the hourly minimum wage to $15 by 2020. That's because Homeboy executives fear the wage increase, which comes up for a full council vote Wednesday, will force them to scale back the number of people they employ.

Homeboy has spent months seeking relief from the law, but only for clients in its so-called transitional jobs training program. Without an exemption, the nonprofit will need to eliminate 60 of its 170 trainee positions by the time the wage reaches $15, said Jose Osuna, the group's director of employment services.

"It would be heartbreaking, because I know a lot of them personally," he told The Times. "For a lot of them, we're the … only organization that's able to serve them."

Seven council members signed a proposal to grant an 18-month exemption for transitional workers employed by Homeboy and similar groups. But when the council voted last month to draft the ordinance, the idea was set aside for more study.

Councilman Curren Price, who heads the committee that crafted the wage increase, opposes the additional relief, saying the city already plans to give a one-year delay to nonprofits with financial hardships or special circumstances. Price said he's not convinced an extra exemption should be given to "a small collection of organizations."

"Philosophically, I do not feel comfortable saying to transitional workers that, because they have faced challenges in their lives, they deserve to be paid less than every other worker in the city," he said in an email statement.

That position puts Price in line with Rusty Hicks, who heads the powerful L.A. County Federation of Labor and is a leader of the Raise the Wage Coalition, which pressed for a $15 wage. Unions and their political action committees spent more than $800,000 to put Price into office two years ago. For weeks, Hicks has argued against extra exceptions for Homeboy and other programs that provide both temporary jobs and social services, such as classes and counseling, to its workers.

Hicks complained the 18-month exemption, which was proposed by Councilman Gil Cedillo, would cover a transitional worker's entire training period. Cedillo, in turn, says Homeboy's clients should not be considered as part of the workforce because they are receiving counseling and other services as they begin to find permanent employment.

"They're more akin to students or trainees," he said. "So the people who provide their education and training will have greater capacity [to help people] if we exempt their business model."

Labor leaders ignited a firestorm last week, pushing for their own exemption from the minimum wage hike, one that would apply to union workplaces where employees agree to a lower pay scale. Hicks suggested he would not have a problem with an exemption for Homeboy if its job programs had collective bargaining, which unionized workplaces do.

"If those program participants had a say in what their wage would be, then that's a different conversation," he said.

Homeboy is only one group seeking the extra help. Chrysalis, which focuses heavily on helping the homeless re-enter the workforce, also wants an exemption. So does the L.A. Conservation Corps, which provides transitional jobs for young adults, particularly those who have struggled in school or had run-ins with the law.

Executives with the corps warn the $15 wage could force them to cut the number of transitional job participants by as much as half, from 400 people to 200. On Friday, workers with the corps told council members their employer had helped them reach critical milestones: earning a diploma, getting a driver's license, learning how to raise a family.

"They helped me be a better parent," said Estefany Mendez, 20, of Echo Park. "They are like my whole family."

At Homeboy, trainees progress from janitorial work to clerical duties to posts in the nonprofit's various businesses, such as the cafe, bakery or silk screening shop, Osuna said. Though they tackle those jobs, they also receive counseling in an array of areas: parenting, substance abuse, anger management, domestic violence.

Miguel Lugo, 36, said those services helped him adjust after years in prison.

"I never knew how hard society was going to be," said Lugo, fighting back tears as he addressed the council. "I never knew how to pay a bill. I never knew how to fill out a job application."

Mark Loranger, president and chief executive of Chrysalis, said he ran the numbers on the proposed wage hike and concluded the increases would add $2 million to its costs by 2018. He said he would not be able to raise enough extra money from donors or other sources to cover the entire expense.

"Any way you slice it, it's a very substantial financial hit," he added.

Chrysalis helped more than 500 clients, many of whom had been out of the workforce for years, find transitional jobs in 2014. The average age of a trainee is 42, Loranger said.

If approved, the wage law would go into effect in 2016. Cedillo remains confident he will have the votes to ensure the measure provides relief to Homeboy and the other transitional job groups.

For Cedillo, the exemption is about giving a second chance to some of the most challenging cases in society: the chronically homeless, former convicts and at-risk youth. "We're integrating people into the workforce, and we're making them better human beings," he said. "How do we put a cost on something like that?"

Follow @DavidZahniser for more news from L.A. City Hall.

READ MORE ON THE MINIMUM WAGE DEBATE:

A new dawn for the minimum wage

Hardware store owner says raising pay resulted in better workers

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