Sub-Minimum Wage Battle Heating Up

The continuing controversy regarding using sub-minimum wage for workers with disabilities (using special worker certificates under Section 14(c) of the Fair Labor Standards Act) rages on. Use of this provision since 1938 has led to far too many examples of exploitation, artificially lowered wages, and poor employment outcomes. It needs to be phased out; review some of my previous postings on this issue.

Recent developments have cast new light on the issue and energized advocates trying to end the practice. Last February, 2014, President Obama issued an Executive Order that raises to $10.10 the hourly minimum wage paid for work performed by parties who contract with the Federal Government, including workers with disabilities. According to the Order, raising the pay of low-wage workers increases their morale and the productivity and quality of their work, lowers turnover and its accompanying costs, and reduces supervisory costs.

Photo credit: APSE

Yet, at the same time, SourceAmerica, formerly known as NISH, as the agency responsible for distributing government contracts to non-profits, continues to routinely award such contracts to many non-profits that pay workers with disabilities less than minimum wage. Indeed, it has even lobbied against the phasing out of Section 14(c). This recently lead to a very public protest of SourceAmerica headquarters by a collaboration of national advocacy organizations, including APSE, the National Federation of the Blind, the National Council on Independent Living, ADAPT, Little People of America, and TASH.

Finally, bi-partisan support continues to grow for US House Bill H.R. 831, The Fair Wages for Workers with Disabilities Act. Now with 96 co-sponsors (as of August, 2014), the bill would end issuing any new special wage certificates by the Department of Labor. It also phases out existing certificates, giving for-profits one year until their certificate is revoked; public entities have two years; and private non-profit vocational providers using sub-minimum wage will have 3 years to transition to integrated job placements at commensurate wages. At that time, Section 14(c) of the Fair Labor Standards Act will also be repealed.

Over 2700 existing certificates are being used across the US currently. Predictably the outcry from most in reaction to the pending legislation has been dire predictions of layoffs, closures, and the spectra of people having nowhere to go or nothing to do. And while this could actually happen, it could only occur if those providers elect to do nothing about modernizing their services over the phaseout. In fact, there are many other agencies that exist that serve the same individuals with the same kinds of support needs, and do so without using sub-minimum wage. A good deal of evidence supports the ending of this antiquated practice.

It’s time to make US wage policy consistent and inclusive of all people, including workers with disabilities.

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.

Low Productivity: More of An Excuse than Obstacle to Real Work

Low productivity assumptions

Several issues reside in the heated discussions over the need to change the traditional day service model for people with disabilities. But the defining one relates to competing beliefs about productivity: 

Can individuals with the most significant disabilities be productive in the workplace, such that sub-minimum wage is unnecessary? 

Those in the individualized community employment sector, myself included, believe yes. We use a zero-exclusion model, reject sub-minimum wage (referred to as 14(c), its legislative shorthand), and no group employment. Looking at various US national databases, these efforts represent probably only about 15% of people with developmental disabilities receiving day services.

Those providers in the much larger majority, the traditional day service sector, utilize segregated work centers and sub-minimum wage, and often rely on group employment models such as enclaves or crews. Yet, the functional levels of those they serve do not appear different from those in individualized community employment.
It appears that the loudest argument against ending 14c sub-minimum wage has been that its removal will take away employment opportunities for those with the most severe challenges. For example, on this blog, commenters talk about how, without a workshop or sub-minimum wage, their son or daughter would be left with little to do. And professional lobbyists for agencies providing more traditional services make the same case. In a recent In These Times article, reporter Mike Elk noted that even leading congressional disability advocate Sen. Tom Harkin will not pursue ending sub-minimum wage, stating that he “has heard from a number of advocates for people with disabilities that eliminating the sub-minimum wage option without having a real plan to create sustainable employment alternatives would be detrimental to Americans with disabilities currently working in 14(c) settings.” 
In reality, there is a real plan that has been around for over 30 years. It’s called supported employment. And eliminating 14(c) does not completely reflect what advocates have actually proposed, which is eventually eliminating it by phasing it out. The article then notes a key source of the position of retaining sub-minimum wage was Harkin’s former top disability staffer who now works as a lobbyist for ACCSES, a coalition of providers. He is quoted as saying: 

  • “Would you hire somebody who is working at 30% and not meeting productivity goals?” 
  • “What if somebody is not capable with or without an accommodation of working at a regular job?  Should we force them into a rehabilitation program with no work or sit at home and watch TV?” 
  • “If you eliminated 14(c), you would lose the opportunity for these people to be trained to be employed.”
Examine these statements carefully. What does 30% productivity mean? Where did it come from? As demonstrated in a workshop? On what tasks? With what support? Is this rate set in stone? How reliable is this a predictor of job success in the community?

A number like that put on a person is damaging; it is just an arbitrary label like any other stereotype.

The assertion that removing sub-minimum wage will lead to job loss is not only unproven, but false. This is demonstrated by the many workers across the US with very challenging disabilities who are working at minimum wage or better, yet whose productivity ratings in traditional (segregated) work training settings were extremely low. It also sets up a false choice (i.e., low paid work or none at all). This kind of thinking is only true if you have a narrow (and I would argue obsolete) view of job placement, productivity, and what people are capable of.

Here is the missing piece: The best predictor of job success is not whether we can convince employers to let people work at lower standards for lower wages; it is how well we customize employment and provide job supports to meet productivity demands. It is inherently unfair to close perceived productivity gaps by reducing the wages of those who need money the most, especially when we have other proven tools to enhance productivity. 

Essentially, human service agencies have relied on sub-minimum wage as an entry tool to access jobs (or keep people “busy” in workshops) in situations that are probably not well-matched nor sufficiently supported or accommodated to enhance good productivity. While it might be somewhat understandable, given the pressure on providers to met job goals, it is a poor solution to the chronic history of unemployment of those with disabilities. With better training and using existing job customization tools, sub-minimum wage is not necessary.

The continuing use of sub-minimum wage is actually hindering our ability to promote and provide well-matched employment. It has become an obstacle, first because of its misuse (the ongoing documentation of many instances of low wage exploitation alone should cause it to end). And secondly, because it has caused providers to rely on a “low cost” plea for job placement, rather than investing in the real task of developing the skills job developers need to produce a more productive job situation.

There are likely many, who after reading this, will still not agree, thinking such job matches and supports such as I describe are unrealistic for most. Note that such customized employment is indeed already being accomplished in many places. In a future blog, I will to try to explain more about how to individualize jobs such that productivity can be reached to justify commensurate wages.

Productivity, at first glance, seems to be just a matter of how fast you do what is given to you. But dig deeper, and you see that is more about how well the worker is matched and supported to accomplish something needing to be done. And the answer on succeeding in that, though challenging, is up to the provider’s abilities at customizing, accommodating, carving, training, and more.

Lobbyists for day programs hanging on to sub-minimum wage as an answer for their belief about those “not capable of work” need to rethink the message they are giving. “He has 30% productivity” is no better than any other discriminatory disability stereotype, and it flies in the face of federal law where there is a presumption of employability. And it’s a damn shame that Senator Harkin has accepted it as fact.

Pennies for Pay Must End

Recently, the Green Bay Press Gazette featured an article that reviewed the ongoing debate over the use of subminimum wages for people with disabilities. The publication found over 10,000 Wisconsin citizens with disabilities earn less than minimum wage, ranging as low as 2 cents per hour. The article also reviews a local sheltered workshop where 96% of workers are paid below minimum.

Readers of this blog know my position on this: A legal minimum wage should be for all citizens. For those individuals with disabilities who need support for their productivity, disability professionals must use current employment practices and technology to customize their job and their support. We should not solve hiring and productivity problems on the backs of those who can least afford it – workers with disabilities.

The argument for sub-minimum wage seems to revolve around the need for less-than-minimum-wage in order for people with disabilities to have access to employment, due to their perceived and sometimes actual lower productivity on certain work tasks. But the bigger issue is that the reason many people with disabilities are less productive when compared to a normed sample is that the work they are offered is poorly matched to their interests and capabilities, or they are not provided needed accommodations. Workers with disabilities aren’t always slower by 50%, 80%, or 90% on all work tasks – it depends on the task, the person, the job fit, and the job accommodations.
When there is a gap between performance needed and produced, the first solution is to re-analyze the job and the person’s capabilities and support needs, not reduce the pay. We should work to try to figure out how to obtain work supports and match job tasks so that the employer gets a productive worker. It is not a question of disability, it is a question of support and job matching.
What is interesting in the article are the comments of a local workshop director and some of the posted comments of the article. They express typical criticisms of those of us wanting to remove the sub-minimum wage barrier:

The stereotypes — including sweatshop-like conditions — “just aren’t true,” … pointing to… openness, clean working conditions and the fact that many employees have chosen to continue working for the organization for decades.

This story is about a group of liberals who want to do good but have no idea what harm will come from their inept actions. You really feel that unemploying this sector of the work force is a good idea? You would feel much better if these people were on benefits instead?

People aren’t being forced to work there … they have a choice.

You start raising the expected Wages, too?…….Expect Charity to disappear
Back away, Do-Gooders……….all you’re doing is feverishly paving the road to Hades

This illustrates some assumptions of many of those who manage, fund, or refer people to workshops – that it should be their choice and that without the small pay rate, there would be no employment. These are false assumptions. I discuss the choice argument in other posts. While I believe we need to stop placing people in workshops for a variety of reasons related to unnecessary segregation, I also think that the pay rate can be exploitive, and the work far too constrictive to menial work unrelated to people’s skills and interests.

There is no doubt that some individuals with disabilities are slower in certain tasks, depending on the task, the skills and the disability. Of course this statement is also generally true of all people. The thing about productivity in a sheltered workshop or enclave, or in a poorly matched or supported job, is that, one, it is largely confined to a limited scope of work, typically packaging, assembly, shipping, landscaping, cleaning or some other rather repetitive task. If you happen to be slow on these types of tasks, make too many mistakes, or just plain disinterested, then you will be judged as not ready for a real job. Two, these workplaces are not always the place for maximum creativity in job support, leading to a further performance drag on the worker.
Productivity is largely related to the match of skill and task, but it is also related to motivation, the sense of belonging, wages, social relationships, self-esteem, the assistance and training you get, and other factors. For example, some jobs require skills other than speed (e.g., accuracy, good interpersonal skills). Thus, the focus on work rate as the only criteria for wage determination can be inappropriate. Furthermore, the actual methods used for time sampling are often faulty. The conditions under which people are being timed as well as the work environment itself can be unnatural.
Mike might earn pennies a day for his slow pace assembling a business mailing, but at the YMCA where he welcomes customers and checks their membership cards, he might be at 100% productivity for the employer. That is, with a little help, he does the job asked. Success comes from liking the work, the people, and this makes him feel good. He also has the supports needed to succeed. Thus, he is motivated. And, he is good at what the employer needs.
This is real productivity. The law does not allow a disability professional to pass judgment on who is productive to earn the right to a job based on incomplete or invalid information. And nor should it allow anyone to determine that an individual is only qualified to earn pennies an hour. This disability system needs to figure out what a person wants to do, needs to do, and needs to have, to be productive. It means finding the right job match and giving the right supports. 

Productivity isn’t fixed. Nor is the setting in which it is assessed. Minimum wage should be the minimum – by definition, the lowest you can go. If there is a productivity gap for a particular employee with a disability, let us work with an employer to solve it in some way so that the cost does not come from the worker who is already likely to be living below the poverty level. Special wage certificates are an “easy out” and no real solution to unemployment and underemployment. And the irony is that these often “token wages” are applied to a group of people who are the most in need of income.

A Turkey Farm Lesson about Group Labor and Sub-Minimum Wage

Not only is sub-minimum wages for workers with disabilities unfair, one of the effects of such wages and using group labor of people with disabilities is the dehumanizing impact it creates on the workers by those around them. I believe this leads to a higher risk of abuse and exploitation.
In April, 2011, the U.S. Equal Employment Opportunity Commission filed a lawsuit against Texas-based Hill Country Farms, alleging that the company subjected a group of 31 men with intellectual disabilities in Iowa  to severe abuse and discrimination for more than 21 years. The men, whose job was to eviscerate turkeys, were subjected to physical abuse and inhumane working and living conditions. The physical abuse including hitting and kicking the men and forcing them to carry heavy weights as punishment. They were also verbally abused and called ‘retarded’ and ‘dumbass.’ If this rings familiar to recent human rights violations at some institutions, you are right. Institutional life is not just about the size of the program, although larger programs tend to be more regimented; it’s also very much about the relationship between group residents and those around them.
The EEOC complaint alleges that that the owners and staffers of Henry’s Turkey denied the workers lawful wages, paying them only $65 a month for full-time work; restricted their freedom of movement; and forced them to live in deplorable and sub-standard living conditions. Documents were ‘contrived’ so that employees would be paid their monthly $65 regardless of hours worked.
This is clearly a case of incredible abuse and exploitation, and is shocking in its level for today’s world. How could such a thing happen? What hasn’t been widely reported is the history behind the development of this situation and some details of the residents living conditions in Iowa. The original owner of the company, T.H. Johnson, was a rancher in Texas. He started a turkey operation there and began using graduating students of the Abilene State School, which was then an institution for students with disabilities, as low-cost laborers in the sixties. In 1968, he was even award “National Employer of the Year” by the “National Association of Retarded Children.” In the early seventies, the company made an agreement with a turkey plant in Iowa to provide labor. A bunkhouse was used as the resident for the first 15 laborers with disabilities brought to Iowa from Texas. This number fluctuated between 20 and 60, but soon settled at about 30 residents with intellectual disabilities. It wasn’t until a 2009 inspection of the residents’ bunkhouse when conditions came to light. The inspection cited the main fire alarm disabled, fire exits blocked or padlocked, holes in the ceiling, bug infestations, mold – generally deplorable conditions. 
The idea of workers with disabilities as low-cost laborers stems from group employment models and the allowance of sub-minimum wage as applied to a group of people – those with disabilities. Certainly exploitation and abuse can happen anywhere, but something of this magnitude is rare. Group labor approaches and the ability to manipulate wages based on “productivity” simply invites an atmosphere where people can be taken advantage of in ways we have not seen in the US in fifty plus years. There is no reason to allow sub-minimum wages anymore; or group models of employment to solve high unemployment of a particular minority group. 
Let’s end the conditions that led to a run-down bunkhouse for workers who earn a $65 monthly wage for full time work. Now. 

Update to the Subminimum Wage Issue

Here is an interesting development concerning the sub-minimum wage issue (see my previous post). Six states enacted measures last year to raise the minimum wage. Two of the six – Ohio and Missouri – included exemptions for workers with disabilities from the minimum wage provisions. The other four – Arizona, Nevada, Colorado and Montana – did not include in their laws any language that would exempt such employees from their new state minimum wage.

Now Arizona Attorney General Terry Goddard has issued an opinion stating that workers with developmental disabilities are not exempt from that state’s new minimum wage that voters approved last November in Proposition 202. The new minimum wage of $6.75 an hour took effect Jan. 1.

Goddard concluded that the “special” minimum wage authorized by the federal Fair Labor Standards Act for workers with disabilities was not incorporated into the language of Proposition 202. Employers in the state previously were allowed to pay a lower minimum wage to individuals with disabilities commensurate with their productivity.

This issue will probably be a battle now. I am on the side of the law as it now stands. Minimum wage should be for everyone – and for those individuals with disabilities who need support for their productivity, let us use what we now know through supported employment to customize their job and their support. We should not solve hiring and productivity problems on the backs of those who can least afford it.

A copy of the opinion can be accessed at

Sub-Minimum Wages: A Disability Oxymoron

Arizona state legislators recently held a hearing to review the state’s new minimum-wage law, which provides $6.75 an hour and does not exempt workers with disabilities from minimum wage. The hearing was packed, with advocates for both sides of the issue. In the US, certain workers, including those with disabilities, can be paid less than minimum wage, unless superceded by state law which can provide for a higher minimum wage.

The federal law, called the Fair Labor Standards Act, includes a provision for a special wage for workers with disabilities. Its purpose is purportedly “to prevent the curtailment of employment opportunities.” Wages must be “commensurate with” (equivalent to) those paid to “experienced workers without disabilities employed in the vicinity for essentially the same type, quality, and quantity of work.” The wage must be tied to the workers’ productivity.

Suppose a job entails putting together a package, something the average non-disabled worker in that area does making nine dollars an hour. And suppose that the average worker can produce ten packages in an hour. Then this becomes our standard for any worker in the workshop doing the same kind of task. Except our worker, for whatever reasons related to his or her disability, can produce only one package in an hour. That means the hourly rate will be one-tenth of the norm, or ninety cents an hour.

Again, this is a topic we mention in Raymond’s Room. Workshop advocates defend less than minimum as fair, and in fact I have seen the use of sub-minimum wages as a marketing tool when appealing to employers for work. The appeal goes something like this: you can get your work done and pay only for what it is worth. But the reality is that the offer comes across like this: we have a special deal – workers with disabilities will work at 30% off!

The bigger issue is that the reason many people with disabilities earn so little when compared to a normed sample is that the work is poorly matched to their interests and capabilities. Workers with disabilities aren’t always slower by 50%, 80%, or 90% on all work tasks – it depends on the task, the person, and the job fit. When there is a gap, the first solution is to re-analyze the job, not reduce the pay.

At the Arizona hearing the arguments seem to revolve around the fairness of setting a minimum applicable to all people, versus the need for less than minimum wage in order for people with disabilities to have access to employment, due to their lower productivity. In order to reach a compromise, the state is considering designating workers with disabilities as trainees in a vocational program. Again, to me, this is the wrong solution – creating a special class of worker in order to pay them less.

The solution instead? We should work to try to figure out how to get the work supports and job tasks so that the employer gets a productive worker. It is not a question of disability, it is a question of support and job matching. Here is what I say in the book:

Minimum wage should be the minimum – by definition, the lowest you can go. If there is a productivity gap, let us work with the employer to solve it in some way so that the cost does not come out of the pocket of the person who can least afford it – the worker with a disability.