The Bad Wages Stew: The Sub-minimum Pay Exposé Includes at Least 8 Critical Issues We Need to Face

Earlier this summer, the NBC’s news show, Rock Center, aired a critical examination of some Goodwill agencies paying workers with disabilities wages as low as 22 cents per hour. Some viewers responded with outrage; others defended the practice as necessary. Readers of this blog will know that I have presented several arguments as to why this practice is truly exploitive and must end. But the Goodwill scenario is particularly interesting because of its complexity. Let’s examine this recent media story more closely, as there are at least eight troubling issues being mixed together in this stew.
1. Extremely low wages for workers with disabilities.
The obvious one is the fact that many workers with disabilities earn next to nothing when sub-minimum wage is used. Why should we allow any employer, and particularly one charged with helping people with disabilities, to provide wages to them that are exempt from minimum wage? Goodwill offers some responses, and we will review these in turn below. But the basic issue is that the people most in need of income are the ones who are being severely shortchanged by the very agency supposedly helping them.
2. The false argument that without low wages, people wouldn’t be able to work at all.
Goodwill’s website notes the practice is a “tool” to help people get jobs “who otherwise would not have them.” On the Rock Center piece, Goodwill International Executive Director Jim Gibbons states that eliminating sub-minimum wages “would mean that many hard-working people would be out of their jobs.” This is only true if Goodwill abandoned those people if the sub-minimum wage was phased out. First, there is no research or other evidence to support people need sub-minimum wage to work. In fact, there is a lot of evidence to the contrary. Consider that at least 50 Goodwill affiliates do not elect to use sub-minimum wage, and many are quite successful at placing individuals with disabilities in minimum wage or better jobs. Beyond Goodwill, there are many examples of other agencies working with individuals with challenging disabilities and providing good job matches at good pay. With proper matching and support, people can be productive to merit minimum wage or better.
3. The wage disparity of non-profit management, their direct service staff, and the people they serve.
In 2011, the top five highest paid employees for Goodwill Industries of the Columbia Willamette (Oregon) made a combined total of $1,506,373 in salary and benefits. With this amount of money going to a few top staff, and at the same time the mission of the agency is stated as “to enhance the quality of life of the people we serve,” there is a severe mismatch of mission and results. A analysis of the recent tax returns for 109 Goodwills that use the Special Wage Certificate found top executives were paid more than $53.7 million. Seventeen Goodwills reported executive compensation in excess of $1 million per year with 30 CEOs receiving more than $293,000 per year in total compensation. With excessive funding going to management salaries, it’s impossible to accept that the workers with disabilities (whom agencies exist to serve) should be subject to incredibly low wages, while doing ANY of the work that supports these executive salaries. This is the very definition of exploitation.
4. Excessive administration costs for serving people with disabilities.
Organizations that receive taxpayer funding to provide services should be held accountable for expenses and the outcomes produced. In this case, noted practices such as:
  • 13 organizations spent more than $100,000 in annual conference expenses.
  • One Goodwill tax return showed a CEO and his spouse were “entitled to first-class travel and access to a private club.” 
5. Misleading marketing that equates donations with jobs.
Many Goodwills use expensive marketing, including billboards, media ads, and more to promote donations, equating the value of those donations with producing jobs for people with disabilities. Yet it is impossible to determine what percentage of donations actually goes to direct vocational services, and what wage outcomes are produced as a result. Certainly high worker wages are not a general result. If Goodwill wants to make advertising claims that say a donation directly results in a job, they should produce the evidence nationally. I would bet that for every $100 spent, less than $1 is paid in wages to a worker with a disability. It would be interesting to see how far under a dollar it really would be. Also troubling is that the marketing of donations paired with employment can produce a underlying message of charity being need for workers with disabilities. This harms national efforts in supported employment core marketing to business of productivity, not charity.
6. The simplistic assumption that for people with disabilities, “it’s not the money, it’s the fulfillment.”
On camera, Goodwill’s Jim Gibbons said it’s not about “livelihood, it’s about fulfillment.” Of course being productive and working is fulfilling. People work for many reasons, and not just for pay. And for those who have been historically kept out of the workforce, any job regardless of pay might seem good. But even if people need to learn about the concept of being paid fairly for work, that doesn’t mean they should be taken advantage of. In fact, exploitation includes paying people less when they haven’t learned or even care yet about the value of their work. Teach them. That’s part of your job.
7. The use of sub-minimum wage to shortcut quality job matching and support.
Providing quality employment services involves individualized planning and support to help people work in jobs well-matched to their skills and interests. Some Goodwill affiliates, and many other agencies like them, have their services flow in the opposite direction. They offer limited job choices, based more on their internal needs than the job applicants. For instance, regardless of Albert’s skills, here is a job in a retail environment selling used items. And when Albert is slow hanging up clothes, and his performance is not equal to expectations, cut his pay to match productivity, even if it is 22 cents per hour. This is inadequate for vocational service at any funding level. What about more training, accommodations, or a better-matched job? I have discussed this issue previously: The best predictor of job success is not whether people can work at lower standards for lower wages; it is how well we customize employment and provide job supports to meet productivity demands. Using sub-minimum wage is, at best, lazy, and under scrutiny, exploitive.
8. The social and self-identity ramifications of workers earning pennies or a few dollars per hour.
Something I have yet to see mentioned in the discussion of this topic is the social price paid when workers receive paychecks of less than a few dollars per week. What can this do to self-esteem and the perceptions of others in his or her social circle? It’s true that some folks might not be affected by their low paycheck, or care what others think of that, but in our society, greater income can lead to many more choices about housing, recreation, free time, and other important facets of society, not to mention pride. If the response is “that doesn’t matter” or “he/she doesn’t care,” then one must question how well people with disabilities and their families have been supported in understanding and building what is possible – the quality life potential in social environments when one earns a decent living, regardless of disability. Maybe if they don’t care, it’s because they haven’t had the experience of disposable income or have been taught the value of money. Maybe those CEOs who are expert in the importance of salary should be responsible for providing this training…
Each of these issues I’ve listed are deeply problematic. None are defensible either morally or as an evidence-based practice. And while state funding agencies and Congress debates, CEOs bring home huge salaries, benefits and perks, while workers with disabilities are kept in poverty, supposedly because 1) they have a “choice” and 2) without enforced poverty, they wouldn’t be working at all. Hogwash. We need to end all of these shameful practices and phase out sub-minimum wages.

Sheltered Work Phasing Out in Rhode Island; Will Your State Host the Next Olmstead Investigation?

This week, the US Department of Justice (DOJ) reached a landmark settlement based on the conclusion that the state of RI and the city of Providence failed to provide services to individuals with developmental disabilities in the most integrated setting, and were putting students in a school transition program at risk of unnecessary segregation in sheltered workshop and day program settings. Earlier this year, DOJ had investigated the state for violating the Olmstead decision of the Supreme Court through its day activity services system. They focused on Training Through Placement (TTP), a North Providence agency that had a sheltered workshop with transitioning students from the Birch Vocational Program and other schools.

Under the settlement, individuals in Birch and the TTP workshops will now receive supported employment and integrated day services sufficient to support 40 hours per week. It is expected people will work an average of 20 hours a week and receive competitive wages. According to the agreement, supported employment placements cannot be in sheltered workshops, group enclaves, mobile work crews, time-limited work experiences (internships), or other facility-based day programs.

The 29-page agreement is quite comprehensive, and follows on the heels of another DOJ intervention regarding sheltered workshops in Oregon (see The Good, Bad and Ugly). This now marks two separate states that within the last six months have been pushed, under the Olmstead decision, into finally taking action against their long-standing policies of primarily funding sheltered workshops for day services. Clearly, the issue of day service segregation is finally moving from “wait and see” to civil rights enforcement. 

Let’s look at the Rhode Island situation further. TTP workers with disabilities made an average $1.57 per hour, with one person making as little as 14 cents per hour. The investigation also found that Birch students were generally denied diplomas. Most were paid between 50 cents and $2 per hour, or were not paid at all, regardless of productivity. DOJ noted that the Birch program had been in existence for 25 years, and was a “direct pipeline” for cheap labor for TTP, which had contracts with local companies. The jobs were mostly typical of sheltered workshops, assembling jewelry, bagging, labeling and collating.

Effective March 31, 2014, the State will no longer provide placement or funding for any sheltered workshop or segregated day activity services at TTP. Further, last March, Rhode Island embraced an Employment First policy. Under the new policy, new participants in the state system that provides employment and other daytime services to 3,600 people with developmental disabilities will no longer be placed in sheltered workshops. The sheltered workshops should be completely phased out within the next two to three years.

The next question that should come to mind, if you are running or funding a program in a state chock full of workshops, is “Am I next?” Readers of this blog can examine the case presented for moving away from sheltered employment in other posts here. I also have had this discussion with some of the US DOJ attorneys. It’s time to expand the Employment First movement so that we away from sub-minimum wage, segregation, and limited work options, based on an obsolete model that can leave people open to exploitation. People with disabilities deserve better in every state. Employment First should not just be rhetoric. Take a leadership role now; there is no reason to wait for a lawsuit…

Salary Disparity in Disability Services: The Other 1%

The Occupy Wall Street movement that began last year was in part to protest economic inequality. A main claim is that large corporations, the “1%,” control the financial system in a way that benefits themselves most of all. Between 1979 and 2007, the incomes of the top 1% of Americans increased 275%. But 60% of those in the middle class had increased income of only 40%, according to the US Congressional Budget Office.
This troubling theme of inequity resonates for many of us who work hard to stay afloat, but I think it also applies to the disability service system. In Oregon, a state review of agency salaries found five top employees at one non-profit earning a total of $1.5 million dollars. This same agency underwent a Dept. of Justice investigation earlier due to the CEO earning over $800,000 in 2004. In New York, the NY Times reported the following: “…
[two management staff] earned close to $1 million a year each as the two top executives running a Medicaid-financed nonprofit organization serving the developmentally disabled. They each had luxury cars paid for with public money. And when their children went to college, they could pass on the tuition bills to their nonprofit group.”
I fully understand that these excesses are not the norm. As a CEO myself in the 1980s, running two different multi-million dollar agencies, I earned between $27,000 and $38,000 annually. And I have nothing against a disability manager who works hard and earns (and deserves) a good income today. But there is a disturbing pattern, especially in large agencies, that demonstrates a huge gap between management, workers, and the wages of people in the workshops they run. We should not tolerate a system that allows, and in some cases encourages, huge wage disparities. Especially pertinent is that many of the workers with disabilities in sheltered workshops run by such agencies earn less than the federal minimum wage. (Currently about 420,000 workers with disabilities earn sub-minimum wage.)
What is a fair salary for those who manage agencies that support people with disabilities? The boards of directors of agencies I have looked at say that it is a function of the size of the agency, its budget, and its complexity. That is fair, but also incomplete. They imply that they could not retain top management talent unless they pay competitive executive level salaries. But what is “competitive?” And to what are we comparing? I think such agencies mistakenly equate the mission and role of management of non-profits with for-profits. Compensation is only a piece of the motivation of those of us who work with and manage resources to support people with disabilities.
Another factor to determine whether disparity exists is to consider two key factors: the front-line staff pay and the pay of the workers with disabilities supported by the agency. ANCOR, the American Network of Community Options and Resources, found that the average wage for private agency direct service staff was just over $10 per hour in 2009, leading to excessive turnover. Of course, staff turnover ultimately compromises services for people with disabilities.
Do you agree this is a problem? And is there a solution? I recommend we take a hard look at how disability resources are being prioritized. 
1. Publicly funded disability agencies need to become transparent in regards to their executive pay and benefits, average staff pay scales, and vocational outcome wages for the people they serve. After all, they are spending mostly tax dollars or charitable funding. This will open up disparities to public scrutiny, which is appropriate for a publicly funded entity.
2. Funding agencies should set clearer parameters for fair wage distributions and also set expectations for flat hierarchies for the agencies with whom they contract. Flat structures place more emphasis on career development as opposed to job promotion. Heavily layered agencies typically spend more money on non-direct services.
3. End sub-minimum wage as a legitimate outcome of vocational services for people with disabilities. Minimum wage should be universal. Really, it is completely outrageous that an agency CEO with a six-figure income will provide a paycheck to the people he or she is pledged to serve for as low as $.22 per hour.