Workers who benefit from Oakland’s minimum wage hike might soon lose a service that enables them to work in the first place. It turns out the well-intentioned law is putting a financial squeeze on Oakland’s child care industry, leading some providers to panic.

“We’re scrambling to find ways to keep the doors open,” said Capt. Dan Williams, Alameda County coordinator of the Salvation Army. He says the added payroll costs of providing workers with a $12.25-an-hour wage have put his organization’s Booth Memorial Child Development Center and family shelter $146,000 over budget, which is “quite a bit for a facility that was barely making it as it was.”

If the Salvation Army can’t scrounge up that money by writing grants and finding donors, it might have to cut some of its 63 child care slots. A number of other day care centers face the same predicament.

Child care centers operate on razor-thin margins — thinner, even, than those of the restaurant industry — and many are lucky to wind up in the black at the end of the year. A restaurant can raise prices to meet the new cost of doing business, but child care operations have limited flexibility.

Organizations like the Salvation Army depend on fixed subsidies from the state, which won’t adjust in response to changes in city law. Both the state-funded programs and their private counterparts are bound by strict state ratio requirements, which mandate that a certain number of employees be present with the children each day. For every four infants, for example, the law requires that centers provide one child care worker.

So traditional staff-cutting isn’t an option for day care centers.

“That’s one of the unintended consequences” of Oakland’s Measure FF, the November ballot measure that raised the city’s minimum wage from $9 an hour, said Richard Winefield, executive director of the nonprofit child care referral service Bananas. “A lot of (centers) are run on very narrow margins, and when they increase the hourly rate on their employees, they need to pass that on in tuition costs, so families need to fork over more money.”

But many families don’t have the wherewithal to pay more, Winefield said. And as a result, they’re getting priced out.

$900 child care bill

Clarissa Doutherd says she had no idea what child care actually cost when she began looking for someone to watch her son Xavier in 2007. She was earning $780 a month as a part-time bookkeeper’s assistant and paying $500 to rent a small in-law unit in East Oakland. Her monthly child care bill came to $900.

“Which is very low-end,” she said. “This didn’t include food, diapers or transportation.”

Doutherd secured a state subsidy that allowed her to keep working, and in two years’ time she’d raised her annual income to just under $50,000. She now heads the organization Parent Voices, which serves parents who want to stay in the workforce. Doutherd counts herself among the lucky ones.

She said there’s a waiting list of parents for state child care subsidies.

Winefield says that in most cases, parents waiting for a subsidy make a few dollars a week above the cutoff for state welfare, but are still “very much in need.” Among them are some 5,000 people from Oakland alone, he said.

Doutherd keeps track of the many painful testimonials from these parents, some of whom can’t keep jobs because they have no one to look after their children. Because they don’t have employment, many are also unable to find housing, she says.

Desperate measures

Parents who now pay for child care could also find themselves in a tough spot if fees go up.

Charlotte Guinn, whose home day care center is entering its 20th year in downtown Oakland, says she raised monthly tuition prices by $40 to $60 in January to anticipate the minimum wage hike, to about $950 a month. When the law took effect last week, she realized that the cost of payroll would require an increase closer to $80 a month.

Guinn doubts she can retain her clientele if she asks for more money.

“I have people who park in front of my home and walk to work so they can save $600 to pay for child care,” she said, adding that one parent recently begged for a payment deadline extension after her car broke down.

“It’s not like you can tell people to give money or not bring your kid,” she said. “That’s not real life.”

Guinn has tried to cut corners in every way possible, asking parents to donate crayons or napkins, and even urging them to sell candy door-to-door to raise money. That didn’t go over so well, she admits. Because of ratio requirements, she can’t lay off any staff to meet her new bottom line.

“I have a degree in business management, and I’m still struggling,” she said. “I feel sorry for my colleagues who don’t have a real business sense. They’re gonna be in trouble.”

Measure FF support

Lift Up Oakland, the group that campaigned to get the minimum wage raised, maintains that businesses will not be hurt by Measure FF. The group, on its website, estimates, “Operating costs will increase by 0.3 percent for retail and 2.8 percent for restaurants.”

Asked if Lift Up Oakland anticipated problems for the city’s child care sector, spokeswoman Beth Trimarco said the campaign “did not specifically analyze impacts on all industries.”

She added that putting more money in workers’ pockets helps them pay for child care and may obviate the need for a second job, “so that less child care is needed in the first place.”

In fact, workers in the city’s child care industry said they supported Measure FF even though they knew it could create hardship for their businesses.

“Knowing what trouble it caused us, I also happily voted for it,” said Liisa Hale, co-director of the East Oakland day care center BlueSkies for Children.

Angie Garling, early care and education program administrator for Alameda County, concurred, calling it “a shame” that the caregivers who make it possible for Oakland parents to go to work every day are still at the bottom of the pay scale.

Now, reality is setting in.

“You’re in a catch-22,” said Gwen Babaoye, program coordinator for the state-funded 24-Hour Oakland Parent Teacher Children’s Center in East Oakland. “If you cut slots, you can’t keep your (state) contract.” But, she added, “You still have to keep the ratio.”

Babaoye worries that 24-Hour might have to shut down in a year or two if it can’t raise enough money to defray the cost of the new minimum wage. That might leave dozens of mostly low-income families who rely on the center with little recourse.

Seeking help

At City Hall, Mayor Libby Schaaf has pulled together a group of local foundations to create an assistance plan for struggling nonprofits, including state-funded child care programs, according to a spokeswoman. Private day cares are in the same boat as other small businesses, which means they’d have to seek help from city lenders and trade groups.

Still, it might be difficult for Oakland to pick up the slack for organizations that have traditionally relied on state and federal grants, most of which are inadequate, said Melinda Martin, an early-childhood consultant. The Salvation Army gets the lion’s share of its funding from the California Department of Education, which supplies $36.10 per child per day, Martin points out.

That has left Williams in an awkward position. “I understand giving people enough money to live,” he said. “The problem is jumping that high that quickly really puts a hurt on nonprofits like us.”

Rachel Swan is a San Francisco Chronicle staff writer. E-mail: rswan@sfchronicle.com

Twitter: @rachelswan