How Much Longer Will People with Disabilities Work For Pennies Per Hour in Sheltered Workshops

The era of the "sheltered workshop" is on the way out

photo: The Chimes, a facility in Baltimore employs people with disabilities to do low-skilled tasks.

Most factory production disappeared long ago from the warehouses on the outskirts of Baltimore. There is at least one remaining, however — and it’s a little different than what you might imagine.

article by Lydia DePillis for The Washington Post | February 12, 2016
At the Chimes, a no-frills building with lofty ceilings and little heavy equipment, hundreds of workers are relaxed and smiling, sometimes approaching visitors to say hello and introduce themselves. The tasks at hand seem more like group art projects than assembly lines, with people chatting amiably while placing bottles of beer into six-pack cartons, or cutting up drop cloths for use by cabinetmakers. Some are cleaning up from breakfast in a bright cafeteria, who others help prepare lunch at the building’s industrial-size kitchen.

Here’s the difference between the Chimes and your typical manufacturing facility: The workers there have a broad range of physical and mental impairments, from cerebral palsy to autism to Down’s syndrome. The non-profit takes on contracts for low-skilled manual labor, paying some program participants less than minimum wage under an exemption from federal labor law for employment of people with disabilities.

How little do participants make? Rates may go as low as less than a dollar per hour, according to individual measurements of a person’s productivity, on the philosophy that it’s better for those who couldn’t get a job on the open market to work and earn even a token paycheck. In Maryland, workers in these types of jobs make $66 on average every two weeks for 17 hours of work. Chimes works with about 2,000 people, 25 percent of whom are paid less than minimum wage. It received $2.7 million in state and federal funding to support just the 240 people who work in the Baltimore facility, along with income from the contracts it fulfills; Lampner says the employment program still operates at a loss.

According to the Department of Labor, 228,600 disabled people across the country work in what’s known as “sheltered” employment; disability advocates estimate that number may be on the low-side due to under-reporting. But the practice has fallen increasingly out of favor in policy circles, and in could soon end entirely in Maryland: A bill is advancing through the state legislature that would phase out the practice by 2019.

Chimes’ CEO, Marty Lampner, thinks that’s way too hasty a move in isolation. “We don’t have the alternatives that are suggested are out there,” Lampner says. "I don’t think you can just slam the door and tell people to go elsewhere, or that the market will pick them up.”

For years now, disability rights organizations have opposed that line of Chimes’ business on the grounds that it creates low expectations for people who should be able to hold traditional jobs at competitive wages. In the past, most notably in the case of Henry’s Turkeys, sheltered workshops have been faulted for exploiting the low-cost labor the exemption enables without providing the services it also requires.

“There are lots of strategies out there to assist with individuals with disabilities,” says Rose Sloan, government affairs specialist with the National Federation of the Blind. “With the proper training and support, I don’t care what disability they have, they can do a job that’s worth at least the minimum wage.”

Until recently, those advocates hadn’t made much headway. A bill that would wipe out the sub-minimum wage exemption was introduced in 2013 and hasn’t gone far; a wave of media attention to the issue was short-lived. About 3,400 organizations hold the certificates, and their lobbying organization —ACCSES — has fought to preserve the status quo. One of ACCSES’s most well-known members, Goodwill Industries International, has been particularly influential in persuading lawmakers that the exemption is the only way to provide work opportunities to disabled adults.

“THE PROVIDERS THAT WANT TO MAINTAIN THE STATUS QUO ARE FIGHTING PARTICULARLY HARD RIGHT NOW, BECAUSE THEY’RE TRYING TO DEFEND A DYING INDUSTRY, BUT THE TIDE HAS REALLY TURNED IN THE LAST TWO YEARS ON THIS ISSUE.” 

— Association of People Supporting Employment Director Allison Wohl

“Eliminating or phasing out the special minimum wage would likely result in many individuals with significant disabilities receiving no wages instead of earning special minimum wages,” reads a 2013 Goodwill position paper on the issue. "Furthermore, they would be denied the tangible and intangible benefits of work: independence, participation, dignity, self-esteem and sense of accomplishment, among others."

Nevertheless, defenders of the practice are now losing on a host of fronts.

A non-exhaustive list: In 2014, Congress passed a new workforce investment law that places a number of restrictions on the use of sub-minimum wages, requiring that disabled people be counseled about their vocational options before being referred to a sheltered workshop. The law also called for a committee to make recommendations on the future of the program, and the resulting report recommended that it be phased out entirely, which the federal National Council on Disability had already endorsed. Meanwhile, Secretary of Labor Tom Perez has stated his opposition to the sub-minimum wage exemption, and last year New Hampshire became the first state to ban the practice.

“The providers that want to maintain the status quo are fighting particularly hard right now, because they’re trying to defend a dying industry, but the tide has really turned in the last two years on this issue,” says Allison Wohl, director of the Association for People Supporting Employment First, which argues that disability service providers should adapt to support people in jobs on the open market rather than concentrating them all in one place. “The way that systems are funded, and the way that funds are distributed, is just not going to hold up in the future."

In hearings at the Maryland legislature this week, disabled people and their guardians argued passionately for the exemption to be phased out. Some disability services providers agreed, saying they had already managed to transition all of their clients to regular jobs in the community. Their trade association, the Maryland Association of Community Services, argued for a longer time frame and higher reimbursement rates for what could be a more expensive model of supporting the most impaired people.

Lampner, of Chimes, is more troubled by the Maryland bill. He doesn’t think that everyone can win competitive work, pointing to the high rate of unemployment among people with much more mild disabilities than the people he serves; he says the market could never absorb all of them. Out of its several hundred charges at any one time, Chimes is able to place around five per month in the open job market. And there’s merit, he says, in allowing people to experience higher-skilled professions in which they might never be fully productive.

“We are obliged to be competitive in the marketplace to get the work,” Lampner says. "And if I don’t pay 14(c), I need to bring in a different class of jobs that are going to be less skilled. One of the reasons I think 14(c) has value is that not everybody wants to be a janitor or a stocker.”

Still, Lampner says he recognizes that times are changing, and is trying out new business models that might fit with where policy is headed. For example, over the past few months he’s created space in the cavernous Baltimore warehouse for internet retailers to locate their entire operations, in exchange for putting disabled people to work.

One of the first pilots is with a company called Cyberspa, which sells kits that rejuvenate the hard drives of aging PCs. It’s starting to sell directly through Amazon, and expects that a team of five to ten Chimes employees could assemble and package 25,000 kits per month. With a sticker price of $99 each, that would even allow the workers to be paid the full minimum wage, even if they couldn’t move as fast as someone without a disability.

“Ten years ago, to launch this product, we would have contracted offshore,” Cyberspa’s CEO, Allen Shay says. "Have someone do this in China and ship them over in big boxes and that would be that.” But remote production is a little riskier these days, Shay says, with the risk of intellectual property theft. A partnership with Chimes made keeping those jobs in Baltimore possible.

So far, it’s worked out for Gary Ragins, 24, who’s confined to a wheelchair with cerebral palsy. He’s been at Chimes for two and a half years, and had worked for a while at TJ Maxx, but took a liking to the part of the job with Cyberspa that involved working with computers. The idea of learning more about technology, Ragins says, made him finally abandon his dream of going to Hollywood to become an actor. “Right off the bat, I really got attracted,” he says.

Lampner — who made $453,000 in total compensation in 2013 — says his goal is for the businesses to employ fully-abled people as well, to provide something more like an integrated experience. Down the road, he figures Cyberspa might get big enough to move into its own facility and take the disabled workers along. Meanwhile, the revenue from Cyberspa’s operations could finance improvements to the building, like a mezzanine level to put more workshop space.

“It’s a not-for-profit. It’s not a non-profit,” Lampner says, explaining his attitude towards earning money.

https://www.washingtonpost.com/news/wonk/wp/2016/02/12/disabled-people-are-allowed-to-work-for-pennies-per-hour-but-maybe-not-for-much-longer/