How The New Overtime Rule Could Actually Help the Non-Profit Sector
For those who aren’t quite caught up, there are changes coming December 1, 2016 to how all domestic businesses must pay their workers. “The Overtime Rule” as many have pegged it, raises the salary minimum for unpaid overtime from $455/week to $913/week. This raises the minimum salary WITHOUT paid overtime from $23,660 to $47,476, or from under $12/hour to just over $22/hour. In short, the law forces businesses (both small and large, for profit and non-profit) to respect work-life harmony and give everybody a living wage. This increase will likely result in millions of workers being bumped up to the $47,476 floor and the free overtime cycles will continue as before. (To provide some perspective, the average ED of a non-profit that has an operating budget of less than $500,000 is $60,206.[1])
Leaders in the non-profit sector have been vocal about the devastating impact that this could have on their ability to deliver on their missions. It’s a fair point honestly, as clearly this will require non-profits to structure hours with greater respect to overtime or find extra revenue sources to keep their doors open. It’s no secret that most non-profits, especially smaller ones, are extremely resource strapped and a rule like this will have a major impact. However, all things considered, I’d like to state a few reasons that “The Overtime Rule” could actually help the non-profit sector.
Everybody Earns A Living Wage
Although many who enter the non-profit world are expecting to live in a lower income bracket, those sacrifices are a complex form of martyrdom. Now pile on the passion these individuals have for the mission and tell me that you expect them to go home when they hit 40 hours for the week. The non-profit workforce is underpaid and overworked, beyond comparison to most entry level jobs. It’s about time that we removed the antiquated dogma that making a difference in the world is mutually exclusive from making a living. By raising the average minimum salary in non-profits (or better managing workloads) we will attract more qualified, passionate and driven talent. Student loans and debt that once buried one’s hopes of a career in the sector become much more manageable with a better pay rate.
Power Through Retention
It’s no secret that the burnout rate in non-profits is through the roof. Low pay, long hours and emotionally draining days pile up and that cushy 9-5 corporate office looks like the new American Dream. This new law knocks out two of the major reasons that people often leave non-profits: low pay, crazy hours. Now think about all of the time and resources that go into training new employees when the old ones burn out and quit. We’re talking about days and weeks here, it’s never a one-hour training session and boom, they’re off to the races. Implementing this overtime rule will likely cut retention therefore cutting hiring and training costs and optimizing impact.
“Overhead” Redefinition
There are TED talks and hundreds of articles that focus on the concept of ‘overhead’ and how it’s keeping the non-profit sector stagnant. I completely agree, we need to make a cultural shift in understanding that in certain situations the saying ‘you have to spend money to make money’ is absolutely and positively true. (Please note that I said certain situations). What’s amazing about this overtime change is that it provides all non-profits with an immediate justification of why their salary expense is so high. It answers the question of “why isn’t 100% of my donation going to X”. This is not a guideline or a recommendation that is championed by a certain demographic, this is law. It changes the conversation and it absolutely opens the doors for further changes down the road.
I understand how some of this seems overly optimistic and impractical but I wanted to outline reasons for optimism and hope. I also fully appreciate the difficulties that this will create for non-profit leaders but I have enough faith in the sector to pull through. I don’t see this as the doomsday scenario that many are depicting it to be, I see this as an incredible opportunity to reinvigorate our employees, our sector and our organizations.
Thank you for reading. As always, you can find me on Twitter (@benjambradley) to keep the conversation going!