This month, the National Council on Disability issued a report assessing “the progress made nationally in modernizing employment service systems for individuals with significant disabilities and who are blind, including settings that pay subminimum wages under Section 14(c) of the Fair Labor Standards Act.”  The report, National Disability Employment Policy, From the New Deal to the Real Deal: Joining the Industries of the Future, identifies state programs that have proven successful in securing employment opportunities for individuals with disabilities, but it also concludes that many structural barriers to opportunities continue to exist.  You can access the report here.

The report’s executive summary is informative:

For the past half century, the United States has been on the leading edge of the advancement of people with disabilities in the world. Through its federal laws, the country has championed the rights of people with disabilities to fully participate in all aspects of American life, including where they live, learn, work, and interact with peers in the community. These seminal statutes, including Title XIX of the Social Security Act of 1965 (“Medicaid Act”), the Rehabilitation Act of 1973 (“Rehab Act”), the Education for All Handicapped Children Act of 1975 (EHCA) (the predecessor statute to the Individuals with Disabilities Education Act (IDEA) of 1997), the Developmental Disabilities Act of 1984, and the Americans with Disabilities Act of 1990 (“ADA”), precipitated many important changes to the very structure of American society, including a movement toward de-institutionalization and full community inclusion.

For example, since 1968, there has been a marked decline in the institutionalized population of individuals with intellectual and developmental disabilities living in state run institutions in the United States.  During the same period, students with disabilities have experienced the right to a free and appropriate public education, including an education in the least restrictive environment alongside their non-disabled peers.  And millions of adults with disabilities access healthcare through the Medicaid program in their homes and communities and not in institutions.

As a result, today, many young people with disabilities have come of age in an America where they live at home and in their communities, go to school with non-disabled peers, navigate their cities and towns free from the physical and architectural barriers that formerly existed, and hold increasingly higher expectations of themselves and others for a self-determined life in the community.

Despite these significant advancements, however, the country and its public institutions are still grappling with the reality that full inclusion is more than mere physical proximity in the community, it is also economic. While thousands of Americans with intellectual and developmental disabilities, blindness, and other disabilities have moved out of segregated residential institutions and now live and attend school in community settings, many such persons, nevertheless, still lack access to typical jobs in the mainstream of the economy, or competitive integrated employment, and in turn, the resources and supports that they need to be fully engaged in civic and recreational activities during the hours that they are not working. Many of these same persons can and want to work and contribute as taxpayers and consumers but are restricted from doing so by considerable structural barriers to employment.

Importantly, as will be explored in depth in this report, even despite NCD’s 2012 policy recommendation to phase out the practice, there remain approximately 321,131 Americans with disabilities that, even while living in the community, still earn sub-minimum wages in segregated sheltered workshops under Section 14(c) of the Fair Labor Standards Act, an 80-year-old policy relic from President Franklin Roosevelt’s administration. Correspondingly, in 2017, the unemployment rate for persons with a disability (those who did not have a job, were available for work, and were actively looking for a job in the 4 weeks preceding the survey) was 9.2 percent, more than twice that of those with no disability.  Put differently, data demonstrate that the labor force participation rate of people with disabilities, those who are working or seeking work, is just 32.6 percent compared to 75.8 percent of the general population.  This gap has remained persistently wide over the past decade, and signals that a disproportionate number of working-age adults with disabilities are not engaged in any kind of work or seeking work each year. For people with intellectual and developmental disabilities (I/DD), the disparity in employment participation is even more profound. Data suggest that in 2014–2015, only 16% of working-age adults supported by state I/DD agencies were employed in a paid job in the community.

Thus, without economic security, millions of Americans with disabilities that now live in the community are shut out of the full range of opportunities derived from being there, quite simply because without a job, they cannot afford, access, or even aspire to such benefits. In turn, employers, local economies, and communities are deprived of such persons’ economic, civic, and social contributions. As more fully discussed below, NCD recognizes that the economic disenfranchisement of 14(c) workers in particular is not solely a policy issue created and enlivened by government programs and, therefore, capable of resolution through government interventions alone.

Indeed, the prevalence of 14(c) subminimum wage programs and the concomitant absence in the labor force of people with disabilities has consequences, in real terms, for the overall economy. Solutions lie as much in coordination with, increased accountability for, and identification of the needs of the private sector businesses as in reform of federal, state, and local government systems. As this report explores, the private sector’s footprint has been firmly planted for decades in sheltered workshops that employ people with disabilities at subminimum wages to supply goods or services to companies, while, dissonantly, many of the same companies have adopted forward-leaning corporate disability diversity, inclusion, recruitment, and hiring practices). The time has come for such companies to create the kind of transparency and accountability that extends the length of the supply chain, and to capitalize upon a talent pipeline created by qualified people with disabilities who have access to federal and state funded supported employment services.

In NCD’s view, the issue of 14(c) employment and labor force participation of people with disabilities remains of great significance to the overall health of our nation’s economy and society. According to the United Nations, countries worldwide forego up to 7% of Gross Domestic Product due to the exclusion of people with disabilities.  More to the point, one of the primary purposes of enacting the ADA was for people with disabilities to be “a new source[] of workers” for American business, and for federal law to remove barriers to work, including discrimination and segregation, to assist such persons to “move proudly into the economic mainstream of American life.”  Yet, the achievement of equal opportunity in employment for people with disabilities remains an important, however unrealized, goal nearly 30 years after the signing of the ADA, as people with disabilities remain disproportionately poor, unemployed and under employed, and face significant barriers to joining and remaining in the American middle class. Perhaps no segment of the disability population experiences these negative effects and barriers to financial self-sufficiency more than individuals who continue to earn sub-minimum wages in exchange for their labor.

Since the National Council on Disability’s report Subminimum Wage and Supported Employment (“2012 Report”),[x] the landscape of law and policy has been considerably expanded to improve the access of those in or at risk of 14(c) sheltered employment and those with the most severe disabilities to competitive integrated employment. These changes include new requirements under the Rehabilitation Act of 1973 as reauthorized and revised by the Workforce Innovation and Opportunity Act (WIOA), the Center for Medicare and Medicaid Services’ (CMS) Home and Community Based Services Rule, Executive Order 13658, Section 501 and Section 503 of the Rehabilitation Act, and increased enforcement of the ADA and Olmstead v. L.C.. Nevertheless, the eighty-year-old FLSA 14(c) exemption, and the related Javits Wagner O’Day Act (JWOD), have remained in place, without significant revision for decades.

Consequently, federal and state funded employment service providers across the country still grapple with providing employment services within fossilized systems in a dynamically changing legal and policy environment. As they straddle the requirements of new and old laws, providers confront significant barriers, as the intended outcomes of many employment funding sources, programs, and services, still conform to models that were conceived of more than fifty years before the ADA, when legal protections were based in a manufacturing-based economy, and at a time when people with disabilities were largely absent from the labor market altogether and, as a result, employment was conflated with charity.

This report comes at a time when the very meaning of work is being re-examined and re-defined once again by and for workers with and without disabilities alike. The nation’s economy is increasingly digital, mechanized, and informational, and the physical world is steadily being reimagined and realigned to keep pace with new technologies. Yet, many people with disabilities in 14(c) employment, including those with intellectual and developmental disabilities or who are blind, remain, in large part, locked out of these changes, and confined to physical brick and mortar sheltered workshops where they perform manual tasks that are often mismatched with their particular strengths and also with their preferences and interests as employees. Such persons continue to perform the jobs of a bygone era, often using outdated equipment, and relying on physical strength and coordination, even though new technologies, services, and supports exist that would allow them to succeed in competitive integrated employment. Moreover, the economy has sent strong signals that demand for such piecework jobs is withering; avoiding modernization is likely not an option even in the relatively short term.

Nevertheless, there remain structural blockades, powerful financial incentives, and the need for enhanced dialogue with self-advocates, parents, and families. The formative focus of leaders and policymakers is called for to break through barriers to transformation and modernization of the 14(c) program. Moreover, employment providers that want to innovate, reinvent, and modernize their services to be responsive to the preferences of people with disabilities, their families, and employers, and the changing laws and, importantly, the new demands of the market, need technical assistance and financial support to do so. And the time to begin this effort is now, as the early innings of the new century of employment are being played, and the structures of the last century continue to bench talented players in the dugout.

This report has evaluated the nation’s progress in shifting away from sub-minimum wage and segregated labor models for people with disabilities, while examining the barriers that remain to doing so. The National Council on Disability renews its 2012 recommendation to the President and Congress for the phase out of Section 14(c), expands upon that recommendation, and issues new recommendations for supporting the rebalancing of existing 14(c) programs to phase-in 21st century jobs and incubate new employment service models to advance the future employment of people with disabilities in competitive integrated employment in the United States.

Among NCD’s recommendations in this 2018 Report are to:

  • impose a moratorium on the issuance of any new 14(c) certificates;
  • strengthen overall enforcement of the 14(c) program;
  • significantly expand and build increased capacity for sustained funding for integrated supported and customized employment;
  • enhance the availability of intensive technical assistance resources, qualified and trained staff, peer-to-peer networks and family supports, and improve the availability of benefits counseling resources;
  • implement business engagement strategies; and
  • introduce and develop new resources and innovations, while leveraging existing resources, to allow people with disabilities to access 21st century jobs and the industries of the future.