New York City contracts with nonprofits to provide $5.6 billion in critical social services to New Yorkers in need. The human services contract workforce employs over 80,000 workers and is staffed predominately by workers of color (75 percent) and women (70 percent). Women of color constitute 55 percent of this workforce. And roughly two-thirds of all full-time human services workers had 2019 earnings below the City’s near-poverty threshold. 

Rather than fund services based on an analysis of the actual cost of providing high-quality services and fairly compensating a well-educated workforce, the City contracting process generally functions to reimburse contracted services at the lowest price possible. This system has forced nonprofits to operate at extremely slim margins and reduces the possibility of human service workers earning wages and benefits that are at parity with comparable positions in either the public or the private sector outside of the City-contracted human services sphere.  

The result is that the human services sector has the fifth-lowest average pay among large employing industries in the city. Average pay is about the same as for restaurants and laundry workers but much less than for those working in clothing stores, hotels, or office clerk settings. Human service workers make between 20-35 percent less in median annual wages and benefits than workers in comparable positions in the public and private sector.  

This report examines the growth and reliance in New York City on the human services sector and documents the wide disparities that exist between pay in the nonprofit human services sector and comparable workers employed by the City of New York.  

It recommends that the City adopt a prevailing wage approach, and establish a wage and benefit schedule for all contracted human services workers to put them on an equal footing with comparable City employees. These compensation benchmarks should then be incorporated into all contracts, along with the funding to support career advancement and promotion opportunities.  

The City should phase in funding increases to achieve full compensation parity, immediately set a higher, living wage floor for all human services workers, and establish a financial reserve for recruitment and retention to stabilize the contracted human services workforce.