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News Maryland Sun Investigates

'Subminimum wage' for disabled workers called exploitative

At a noisy warehouse off Veterans Highway in Millersville, a young woman concentrates as she pokes black shoelaces into cardboard packaging. In another room, workers slowly count tiny bottles of hair products, placing them in plastic bags that will end up as samples in salons.

To some, these workers with developmental disabilities are getting valuable on-the-job-training and the self-respect that comes with employment. Others say they're being exploited — because wages in the facility, run by a nonprofit, are as low as 25 cents an hour.

A nearly 80-year-old exemption in the U.S. Fair Labor Standards Act allows employers across the country to pay so-called "subminimum" wages to hundreds of thousands of people with disabilities. In Maryland, some disabled workers have been paid as little as a penny an hour in recent years, according to documents obtained by The Baltimore Sun through public-information laws.

One person was paid 68 cents an hour to assemble trophies, records from the U.S. Department of Labor show. Another received an hourly rate of $3.20 to do laundry for a uniform company. And one made $2.44 an hour to sweep, mop and straighten shelves at a thrift store.

A debate about the wages paid to these disabled workers has divided nonprofits in Maryland and nationally. Opponents say the system is holding back participants, feeding a cycle of low expectations and dependency. Under the exemption, there is no limit on how long workers can hold the low-paying jobs.

"You set people's expectations very low, you say this is all you could ever hope for — and then that's what you're stuck with," said Chris Danielsen of the Baltimore-based National Federation of the Blind, which has been trying for years to eliminate the subminimum wage.

"What's really between people with disabilities and their dreams, and having a normal productive life, is the low expectations," he said.

Some nonprofits that serve people with disabilities defend the program — known as 14(c) for the exemption in federal labor law — as a tool to help workers find employment. The jobs provide a paycheck while the workers gain training. Without it, they might not get any work at all, supporters say.

"This gives them the ability to work and still earn money and gain self-esteem with medical and behavioral supports still in place," said Vicki Callahan, executive director of the nonprofit Opportunity Builders Inc., which employs the people working in the Millersville warehouse. "A lot of people who walk through this building would say, 'I never thought they could do work.' The fact is, they can — with support."

All sides agree that the unemployment rate among people with disabilities is troubling. Just over 19 percent of disabled people work — compared with 68 percent of all Americans 16 and older, according to the U.S. Department of Labor.

Those who favor the 14(c) program say that without it, the numbers would be even bleaker.

"Many employers are not willing to give these folks a chance," said Martin Lampner, CEO of Chimes, a Baltimore-based nonprofit that offers services for people with developmental disabilities.

Debate about the subminimum wage drew attention in 2012, when the National Federation of the Blind urged a boycott of Goodwill Industries because of its CEO's half-million-dollar salary, but efforts to abolish the 14(c) program began decades ago.

Rep. Gregg Harper, a Mississippi Republican, has been an ally of the Federation of the Blind in the campaign. He has sponsored the Fair Wages for Workers with Disabilities Act, which would phase out the 14(c) program over three years.

To Harper, the low wages are a form of discrimination, one that is stopping people from reaching their full potential.

"We believe that what we're seeing is just extremely unfair," said Harper, whose son, Livingston, has the intellectual disability Fragile X syndrome.

The issue again gained a national spotlight in February, when President Barack Obama signed an executive order requiring federal contractors to pay all workers — including the disabled — $10.10 per hour.

In Maryland, advocates had hoped that this year's political focus on raising the state's minimum wage would bring attention to disabled people earning subminimum pay, but no one introduced legislation to address the issue.

"If you're speaking about wages and improving living conditions, then you have to have that discussion with the entire workforce," said Dan Schmitt, a board member of the Arc of Maryland, which has joined the campaign to end the subminimum wage.

Pay based on productivity

Through the U.S. Department of Labor, employers can apply for a Special Minimum Wage Certificate, which gives them permission to pay less than the federal minimum wage — currently $7.25 an hour — to workers who have disabilities. Maryland has about 45 such employers, according to the department.

Most are nonprofits that serve people with disabilities. Some employ a handful of workers, while others employ hundreds, paying wages that can vary widely. The nonprofits often contract with businesses that need the services disabled workers can provide. These job sites, where people with disabilities work apart from others, are sometimes called sheltered workshops.

Employers calculate the pay of a 14(c) employee based on how much the worker can produce compared to a person who doesn't have disabilities. For instance, if an able-bodied person can clean a bathroom in 20 minutes and it takes a disabled worker 40 minutes to do it, the worker would be paid half the prevailing wage in the area for a janitor.

The pay can be different for workers doing the same job, depending on their ability. In the kitchen of a cafe in Northwest Baltimore run by Chimes, for instance, Cindy Iames, 58, earns $4.44 an hour helping to prepare food. John Britt, 28, who also works in the kitchen, makes $7.55 an hour — more than the minimum wage.

At the Opportunity Builders warehouse, payment is based on a wage of $10 per hour, Callahan said. A worker who can do half as much as an able-bodied person would make $5 per hour. But some workers earn more than $9 an hour, she said.

The nonprofit fills 15 to 20 contracts a month, with an emphasis on packaging, assembly and distribution.

Callahan and others say people with complex disabilities often need support that they can't get from other employers. On a recent morning at Opportunity Builders, one worker needed a staff member to help him count bottles of hair products and another laid his head down as his peers filled the packages.

Severna Park resident David Lawrence, 44, earned an average of 99 cents an hour last year at Opportunity Builders. The intellectually disabled man has been with the organization for about 20 years. Earning a paycheck is an important part of his life, said his father, a member of the nonprofit's board.

"He doesn't realize what he can or can't buy with it," Chet Lawrence said. "But the fact that he gets it is a very uplifting experience."

The most important thing, he said, "is for David to be doing something that he likes, that is productive. ... If we insist upon him getting the minimum wage, I believe all the work would basically dry up."

Supporters of the special wage certificates point out that most agencies that use them provide a spectrum of job-training services and that working under the 14(c) program can help some people develop enough skill to get jobs in the community at a conventional rate of pay.

"We intend to move them into the community because that's ultimately our objective," said Dan Kurtenbach, president and CEO of Goodwill Industries of Monocacy Valley, which holds a 14(c) certificate.

Opponents point to a 2001 investigation by the Government Accountability Office, the investigative arm of Congress, which found that only 5 percent of those in sheltered workplaces end up finding jobs in the community. And they say that the premise of the subminimum wage — basing a wage for the disabled on a lesser productivity — is inherently discriminatory.

"No matter what your level of productivity, the minimum wage is set nationwide for all workers," said Cari DeSantis, the CEO of Melwood, a nonprofit in Prince George's County that serves and employs people with disabilities. Among other services, its employees do janitorial work for government agencies and groundskeeping for businesses and other organizations.

Melwood for many years used the 14(c) program to pay a subminimum wage to its workers. But DeSantis said it bothered her. She thought of the workers in Melwood's greenhouses, which provide plants to clients, including the Kennedy Center.

"The thought of having paid him or her less than minimum wage just strikes me as wrong," DeSantis said.

Last summer, DeSantis led a policy change, and all of Melwood's workers now make at least minimum wage. The shift cost Melwood about $50,000; the organization says it has covered the added expense through administrative efficiencies.

At The Arc Baltimore, which serves people with developmental disabilities, administrators have been "on a steady path to eliminate the payment of subminimum wage," Executive Director Steve Morgan said.

But because the workers might not be as productive as those that private employers can find elsewhere, the Arc continues to pay some employees a lower wage.

"It can be challenging for us to find private contracts where a company is paying us enough to pay everyone minimum wage," Morgan said.

Relic of old attitudes?

In the 1970s and 1980s, Baltimore resident Charles Biebl worked in a sheltered workshop. He screwed parts onto the backs of telephones, and was paid per phone. He remembers a week in 1975 when he worked overtime and still earned just "$15 and some change."

"The philosophy was, 'They ought to be happy, be thankful for what they have,'" said Biebl, 61, who is blind and lives in East Baltimore with his 92-year-old mother.

Biebl calls the end of subminimum wage "way overdue."

"We do want to be productive, just like anybody else," he said.

Last year, the federal government began investigating Rhode Island's system of employment for intellectually and developmentally disabled workers. It concluded that the state relied too much on programs that kept such workers separated from others. In a settlement this year, Rhode Island agreed to provide more opportunities for work in mainstream jobs.

Vermont phased out its sheltered workshops over 20 years, with the last one closing in the early 2000s, said Bryan Dague, a research associate at the University of Vermont's Center on Disability and Community Inclusion.

Vermont was a pioneer in developing the concept of community-based employment and set up pilot projects that were replicated across the state.

While some agencies resisted, "the sheltered workshops just eventually closed down," Dague said.

The state took a gradual approach, limiting and then prohibiting funding for sheltered workshops and "enclaves," where a group of people with disabilities worked separately from others at a business, said Jennie Masterson, supported employment services coordinator at the Vermont Division of Disability and Aging Services.

When the last sheltered workshop closed, about 50 people worked there, she said. Roughly 90 percent found employment in the community.

She did not have an estimate of the overall costs involved in the switchover. But as an example, she said the state provided $50,000 for the agency running the last sheltered workshop to hire a full-time job developer to help individuals find employment. Vermont also increased each individual's Medicaid allotment to cover the cost of employment and support services.

Dague says the debate over 14(c) is not simply about wages.

"There's very low expectations in sheltered workshops," Dague said. "You can just sort of sit around not doing anything. ... It's not an environment where they're really going to learn either the work skills or the social skills that they're going to need to function in the community."

Over time, a shift in attitudes has led to "greater and greater integration," of people with disabilities, said Ari Ne'eman, president of the Autistic Self Advocacy Network.

"We've certainly seen that in housing," Ne'eman said. "Now it's time to do the same within the context of employment."

alisonk@baltsun.com

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Copyright © 2014, The Baltimore Sun
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