A closeup photo of a pile of dirty pennies.

Paying Disabled Workers Fair Market Wage Isn’t Just Ethical…It’s Economical

It was a hot summer and I was on the longest road trip of my life when I found the perfect product, something that would keep the heat at bay. It was exactly what I needed and only one small company sold it. That would be the end of a rather ordinary story if it weren’t for the words boldly emblazoned on the company website: “Manufactured locally in partnership with a Missouri Sheltered Workshop.”

“Sheltered workshop” is an increasingly outdated term for what the Department of Labor now calls “work centers.” When the Fair Labor Standards Act of 1938 (FLSA) was passed, special provisions were made, authorizing employers to pay disabled workers less than the established minimum wage — often a token pittance. The certificate that allows an employer to pay below minimum wage is called a 14(c) certificate because the rules for such workplaces are explained in section 14(c) of the FLSA.

There are 90 sheltered workshops in the state of Missouri, employing over 6,000 disabled workers. Nationwide, around nearly 250,000 people work in sheltered work centers that are permitted to pay less than minimum wage.

The system is allegedly set up to help disabled workers transition from sheltered work to the open labor market, but in reality workers end up staying in exploitative labor situations for years or even decades.

There was no way I could buy something that was manufactured in a sheltered workshop without going against everything I hold to be true and ethical and just. So I wrote to the owner, telling her how perfect her product was but expressing my reservations about the method of their manufacture. I needed to know what my money would be supporting if I made the purchase.

I guess I was hoping she would write back about some mythical sheltered workshop where everyone was being paid at least minimum wage and the program was actively working on helping employees transition to supported work in the community. But what she wrote back dashed cold water on that dream:

“We are very proud to be utilizing the services of a local Sheltered Workshop, which by definition means ‘a private non-profit, state, or local government institution that provides employment opportunities for individuals who are developmentally, physically, or mentally impaired, to prepare for gainful work in the general economy.’” she wrote. That would be great if the workers were paid fairly and if the programs really were preparing employees for gainful work in the general economy.

Instead, workers in most sheltered workshops are paid piece rates, a business model so exploitative that laws require employers to make up the difference when piece rate falls below minimum wage…unless the employer holds a 14(c) certificate, in which case it’s legal to pay pocket change for hours of labor. Moreover, sheltered workshops are isolated from the community, which is a violation of civil rights, due to the heightened risk of exploitation in isolated settings. As if all that weren’t outrageous enough, the Government Accountability Office reports only 5% of sheltered workshop employees leave to work in the community.

And yet, far too many people assume that sheltered workshops are ethical and compassionate. The small business owner with whom I was corresponding wrote to me, “what if I were mentally challenged, or my child, to where I could not hold a job in the ‘normal’ workplace? I know I would certainly appreciate the opportunity to be made to feel productive, earning a paycheck would be a bonus.” This woman outright dismissed the value of disabled workers, assuming that making disabled people “feel productive” justifies extremely low wages.

But the pride that comes from feeling useful and productive is not a just substitute for living wages. We are not charity cases! We deserve the same workplace protections as everyone else and equal pay is one of our fundamental civil rights.

It’s likely that the small business owner with whom I was corresponding was justifying her bottom line. “We were thinking we might need to look at China for production…when someone suggested we look into the Sheltered Workshops…We felt it was a win win, keeping the dollars here, keeping them in our own state, and helping the disabled.”

The low-cost production sheltered workshops seem to be offering is just smoke and mirrors. Only 44% of the money that keeps sheltered workshops functioning comes from production contracts and retail sales. Moreover, 46% of funding comes from agencies at all levels of government, primarily from Medicaid funds. Supported community employment costs less than sheltered workshops and the cost goes down over the working life of a community employee but up for sheltered employees. Despite the lower wages paid to 14(c) workers, sheltered labor costs more — costs that are passed along in taxes to small business owners who don’t realize they are losing money.

The state of Vermont closed its last sheltered workshop in 2002 and now Vermont boasts an employment rate for workers with developmental disabilities double that of the nation at large. Average wages for disabled workers in Vermont are more than 50 cents higher than Vermont’s state minimum wage, which itself is higher than the federal minimum wage by $2.75. Vermont is modeling fair disability employment for the rest of the country.

It’s time for everyone to realize the bigger picture. Ethics and economics both agree: paying disabled workers less than minimum wage is bad for everyone. As a society, we agree that exploiting workers is wrong. This ethos should not budge when workers are disabled.

Our communities flourish and our economic base becomes stronger when disabled workers are welcomed into the community, supported, and paid a fair market wage.

“Bottom Dollars,” a Rooted in Rights original documentary that exposes the exploitation of people with disabilities who are paid sub-minimum wage, is now available to rent or purchase.

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