The nonprofit group Chrysalis provides work to those who struggle to get hired elsewhere — people who've lived on the streets, lack skills and education or are saddled with a prison record.
The organization, which has offices in Pacoima, Santa Monica and downtown, gives them jobs cleaning up neighborhoods, answering phones and maintaining buildings, along with training and other assistance to smooth their transition to their next jobs.
Now city leaders appear poised to require Chrysalis and other charities to offer their disadvantaged clients something else — raises of at least $3 an hour.
As Los Angeles ponders hiking the citywide minimum wage to as much as $15.25 an hour, some nonprofits face a dilemma: They are dedicated to lifting Angelenos out of poverty but also concerned about some aspects of an ambitious City Hall plan meant to do just that.
Unlike businesses that can pass along increased costs to customers, some nonprofits that rely on government grants worry that state and federal agencies will not increase that funding to offset the higher wages required by the city. Others, including Chrysalis, say the financial squeeze could make it harder to help Angelenos outside the workforce find their way back in.
Mark Loranger, Chrysalis' president and CEO, says his group might not be able to provide as many jobs to those at the bottom of the economic ladder. Over the course of last year, more than 500 clients got work with the nonprofit — roughly 220 people at any given time.
"We support a pathway to a higher minimum wage," Wendy Butts, chief executive officer of the L.A. Conservation Corps, told a panel of city lawmakers at a recent hearing in Watts.
But "the impact of a rapid, large increase in the minimum wage on our programs would be significant," she said. "We would be forced to reduce the number of program participants that we serve — the opposite of what all of us want to achieve."
Mayor Eric Garcetti has proposed a step-by-step plan to raise minimum pay to $13.25 by 2017, with future increases tied to an inflation index. Several council members want to go further, boosting pay across the city to at least $15.25 by 2019. The idea has been strongly endorsed by labor unions, some business leaders and a host of community groups, and challenged by large business organizations such as the Los Angeles Area Chamber of Commerce.
The debate has put some L.A. nonprofits in a difficult spot. Many are speaking cautiously about their concerns, leery of becoming poster children for the opposition to a wage increase that they generally support.
Loranger, for instance, stressed that Chrysalis did not oppose the wage hike for its regular, permanent staff. But he estimated that an increase to $13.25 for people hired into its transitional employment program could cost the agency more than $1 million in added costs. Those entry-level workers now receive $9 an hour, the current state minimum.
Both he and Butts emphasized that their programs to move the unemployed into the workforce include added training and assistance for participants. In one case, Loranger said, Chrysalis helped a worker obtain a driver's license and a certification to operate a forklift, paving the way for him to get a permanent job.
"We invest significant resources to prepare them to compete in the workforce," Loranger said. "Oftentimes that far exceeds their wage."
Several council members want to give nonprofits extra time to phase in the proposed increases. Councilmen Bob Blumenfield, Mitch O'Farrell and Felipe Fuentes have suggested a slower schedule for hiking pay at nonprofits that don't have a wide disparity between the highest paid employees and those making less than the new minimum wage. They have also proposed that programs designed to help disadvantaged workers enter the job market could be allowed to pay trainees a lower wage for a limited period of time.
The Chamber of Commerce and other critics of the wage plan to argue that L.A. should exempt nonprofits entirely. Proponents of the wage increase say any delays or exemptions should be narrowly written.
"The argument is 'These are the people on the side of the angels,'" said Daniel Flaming, president of the Economic Roundtable, which analyzed the wage boost for the county labor federation. But he noted that nonprofit organizations include big-budget universities, hospitals and private foundations.
Flaming and his fellow researchers found that 44% of nonprofit workers living and working in Los Angeles — some 26,000 residents — would stand to get a raise if the city hiked wages to $15.25 by 2019. Several nonprofits are enthusiastically supporting the plan, including the Community Coalition, Green Dot Public Schools, and St. John's Well Child and Family Center, which have already increased their wages to at least $15 an hour.
"As an anti-poverty organization, I didn't think it was appropriate for us to continue to pay poverty wages," St. John's president and CEO Jim Mangia said. To offset the increases, Mangia said, the center reduced other costs by switching labs and starting to perform X-rays and ultrasounds with its own staff.
Those higher wages have eased the strain on St. John's call center operator Angie Acosta. When the 23-year-old first started her job three years ago, she earned $11.33 an hour.
Back then, Acosta said, "I was slowly and surely going into debt.… Now I'm able to pay for classes without getting loans. I can buy books and not put them on my credit card." Acosta also helps support her parents, pays for groceries, utilities and other day-to-day expenses and juggles community college classes with her full-time job.
The California Assn. of Nonprofits is supporting the L.A. pay hike. The association acknowledges that some nonprofits may need extra time to adjust but points to a survey of members showing they generally support a minimum-wage increase. In a letter to city lawmakers, the group warned that opponents of wage increases often use nonprofits as a "front man."
"In the long run, we don't want to create a low-wage workforce among nonprofits," said the association's policy director Nancy Berlin. "It creates high turnover and a lot of disgruntled people who are trying to do good work in the community."
Even some nonprofit leaders who are worried about the wage hike say they shouldn't be exempted completely. Valley Village, a San Fernando Valley nonprofit that provides residential and day care for people with developmental disabilities, says it supports the idea of boosting the minimum wage but estimates it faces a 31% bump in its payroll if wages increase to $13.25.
"It would be very, very difficult" unless the state also increases funding to the nonprofit, said Valley Village controller Phil Motherspaw.
But if Valley Village were simply excluded from the city wage increase and allowed to pay lower wages, Motherspaw added, "we would lose all of our good employees to McDonald's."
Follow @LATimesEmily for breaking news from L.A. City Hall