Analysis Human Rights

For People With Disabilities, Earning Pennies Per Hour Is Only Part of the Problem

Robyn Powell

Supposedly, the goal of so-called sheltered workshops is to train people with disabilities to work in integrated settings, earning typical wages. But that is rarely what happens.

Imagine earning 50 cents per hour while your nondisabled co-worker makes at least minimum wage for completing the same work. It may sound appalling, but it is completely legal because of an archaic provision of the Fair Labor Standards Act (FLSA) that permits employers to pay people with disabilities less than minimum wage. And nearly 2,000 employers are continuing to take advantage of that rule.

The FLSA was passed 80 years ago to protect workers by establishing a federal minimum wage, overtime pay, and prohibitions on child labor. During the signing of this sweeping legislation, President Franklin D. Roosevelt called it “the most far-reaching, far-sighted program for the benefit of workers ever adopted in this or any other country.”

Yet, the FLSA did little to protect workers with disabilities. Indeed, Section 14(c) of the FLSA allows the U.S. Department of Labor (DOL) to issue certificates to employers that permits them to pay workers with disabilities less than the federal minimum wage (currently $7.25 per hour). Based on a charity model, the intent of this provision is to promote employment opportunities for people with disabilities. People with disabilities earning subminimum wages typically work for nonprofit organizations or state agencies in so-called sheltered workshops, isolated from society.

A 2013 investigation by NBC News, for example, revealed that one of the nation’s best-known charities, Goodwill Industries, was at that time paying workers with disabilities as little as 22 cents per hour. Currently, there are about 150,000 people with disabilities across the United States who are being paid less than minimum wage, according to data from the DOL.

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Last month, seven Democratic senators, including Elizabeth Warren (D-MA), called for an end to subminimum wage on the same day that an Illinois nonprofit organization was accused of exploiting workers with disabilities.

“These waivers are inherently discriminatory and should be phased out in a responsible way,” they wrote in a letter to Labor Secretary Alexander Acosta. “While the Department continues to issue these waivers, however, we are concerned by past abuses of the program and hope to better understand the extent to which the Department is able to prevent employers’ mistreatment of and discrimination against workers with disabilities.”

That same day, DOL revoked a Section 14(c) waiver from Rock River Valley Self Help Enterprises, an Illinois nonprofit, “after finding nearly 250 workers with disabilities were being exploited.” Self Help ran a sheltered workshop where workers with disabilities completed menial tasks, such as scraping debris from metal casts.

Not only was Self Help paying their disabled workers less than minimum wage, but some were paid gift cards instead of money. In revoking Self Help’s waiver, also DOL noted that the nonprofit failed to provide proof that the employees with disabilities were less productive than their nondisabled counterparts, which is among the requirements to get a waiver. Accordingly, DOL ordered Self Help to pay two years of back wages to more than 250 employees.

Supposedly, the goal of sheltered workshops is to train people with disabilities to work in integrated settings, earning typical wages. However, that is rarely what happens. In fact, only 5 percent of employees who work in sheltered workshops transition to a job in the community, according to an investigation by the U.S. Government Accountability Office.

Of course, subminimum wage is only one of countless ways in which people with disabilities continue to face substantial barriers to finding and keeping meaningful employment. Indeed, the same archaic beliefs about the productivity of people with disabilities that led to Section 14(c) rear their ugly head in every aspect of employment, resulting in abysmal employment rates.

Although people with disabilities make up nearly 20 percent of the U.S. population, they are notably absent from the workforce. In 2016, only 18 percent of people with disabilities were employed, compared with 65 percent of people without disabilities, according to data from the DOL. For people with disabilities who are multiply marginalized, such as disabled women of color, the rates of unemployment are even higher.

Accordingly, the wage gap between people with and without disabilities is equally troubling. In 2016, people with disabilities earned 68 cents for every dollar paid to nondisabled individuals, according to a report from the American Association of University Women.

Despite legal protections, such as the Americans with Disabilities Act (ADA), which passed nearly 30 years ago, people with disabilities continue to encounter pervasive discrimination by employers. In fact, disability-based discrimination was the issue most frequently litigated by the U.S. Equal Employment Opportunity Commission (EEOC) in 2016.

Bias presumably plays a significant role in the underemployment of people with disabilities in non-sheltered workshop settings, as researchers from Rutgers University found after submitting more than 6,000 job applications in response to advertised accounting positions. Two-thirds of the applicants disclosed their disabilities—Asperger’s Syndrome or a spinal cord injury—in their cover letters, while the remaining applications did not mention a disability. Although all of the fictional applicants were equally qualified and their disabilities would have no impact on productivity in accounting, the applicants who disclosed their disabilities received 26 fewer responses from employers.

In addition to contending with stereotypes from employers about the capabilities of people with disabilities, there are also substantial misconceptions related to the cost of employing someone with a disability. Examples of reasonable job accommodations include accessible software, sign language interpreters, and flexible work schedules.

While the ADA does require employers to provide reasonable accommodations to disabled employees, most accommodations are not cost-prohibitive, says the Job Accommodation Network (JAN), which has conducted research on this issue for more than a decade. “The study results consistently showed that the benefits employers receive from making workplace accommodations far outweigh the low cost.”

In fact, JAN has found that the majority of reasonable accommodations cost employers nothing, while the rest usually cost around $500.

Another somewhat counterintuitive barrier to employment for people with disabilities is safety-net programs, such as Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI), which discourage work. The fact is many people with disabilities would rather work than live on the meager SSI or SSDI benefits, which is on average about $750 or $1,060 per month. However, if people earn money, they may lose some or all of their benefits.

To receive SSI or SSDI, people with disabilities have to jump through a number of bureaucratic hoops to prove to the Social Security Administration (SSA) that they cannot work. Most people who apply for SSI and SSDI are ultimately denied even after going through a lengthy appeals process that can take years, and many people die while waiting for a decision from SSA.

Throughout the years, SSA has implemented a number of programs that are supposed to encourage people with disabilities to work. For example, there is a nine-month trial period where people can earn money while continuing to receive SSI or SSDI. There’s also the “Ticket to Work” program, which ostensibly assists people with finding employment.

Yet, participation in these programs remains low, largely because of their complexity. “The Ticket to Work program has been over bureaucratized to the point where people don’t use it,” Kelly Buckland, director of the National Council on Independent Living, told The Washington Post. “We don’t think it has done anything to help employment of people with disabilities.”

Medicaid is also a work disincentive for many people with disabilities who rely on the publicly funded health insurance not only for health care but also vital supports, such as personal care assistants (PCAs), that allow them to live in the community. Indeed, Medicaid is the only health insurance that covers PCAs and similar long-term services and supports. People who receive SSI are automatically eligible for Medicaid, and if they no longer are eligible for SSI because they found employment, they will likely lose Medicaid. In other words, people with disabilities often have to choose between working and receiving Medicaid.

Some states have adopted Medicaid Buy-In programs, which allows working disabled adults to keep Medicaid by paying a monthly premium. However, the federal government has made these programs voluntary and not all states have implemented them.

Medicaid expansion under the Affordable Care Act (ACA) has helped to remedy these problems by increasing income eligibility. Tellingly, a recent study found that the employment rate of people with disabilities is higher in states that have expanded Medicaid. Of course, the fate of the Affordable Care Act is uncertain.

Meanwhile, the Trump administration continues to roll back protections for people with disabilities. For example, in December, the U.S. Department of Justice (DOJ) withdrew Obama-era policies that required states to reduce sheltered workshops. Moreover, DOJ, the federal agency responsible for enforcing the ADA and other civil rights laws, has decreased the number of civil rights cases it’s investigating and enforcing. And the incessant attacks on the ACA by the GOP and Trump administration, as well as the implementation of work requirements for Medicaid recipients, will hurt people with disabilities and lower their chances of working.

Surely, lawmakers should recognize the importance of improving employment opportunities for people with disabilities through elimination of subminimum wage, enforcement of disability rights laws, and the expansion of safety-net programs. But despite the recent senators’ letter—which the DOL has not yet apparently responded to—that does not appear to be the case.

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