(Almost) Everything You Need to Know About Sheltered Workshops (Part 1 of 2)

This was originally going to be one very, very long post. It has since been suggested to me that you may not want to spend your Sunday morning reading 7,000 words on sheltered workshops and disability employment policy. Tragically, there is no accounting for taste. ūüėõ I’ve split it up into two posts, the second of which will go live on Friday.¬†

Let’s get started…

Disability policy is full of examples of yesterday’s innovation becoming today’s indignation. As my friend Anne Donnellan once put it, “The mark of anyone good in disability service-provision is that they’re at least a little bit ashamed of what they were doing twenty years ago.” The opposite of this is also true – many of the worst disability services come from becoming too attached to program¬†models that were considered state of the art in previous decades.

There is a reason why my home state of¬†New Jersey,¬†which was¬†wealthy and progressive enough to begin building special education schools for children with disabilities well before Public Law 94-142 required it, is¬†today vastly behind when it comes to including students in the general education classroom.¬†With all due apologies to Field of Dreams, the unspoken rule of disability service-provision is, “If you build it, someone is going to get stuck in¬†there.”

A lot of things drive this. Some if it is economic Рinstitutions, special education school and other facilities exclusively serving people with disabilities will generally face high fixed costs of operation, and will either require constant fundraising, unsustainable rates of state reimbursement or Рmost likely Рthe ability to spread those fixed costs over as many disabled people as possible. Other aspects of the problem are political. Any time you fund a new entity or class of providers, a new association and lobby will likely emerge to defend and advance their interests.

Lobbying to protect and expand funding is not a habit limited to segregated settings, but it does mean that states which built such settings a long time ago have a very hard time divesting themselves of them today. When I did work in New Jersey on special education policy, I could reasonably expect any state or county hearing on the topic to be packed with lobbyists from special education schools ready to oppose any effort to impose stronger oversight on topics like restraint and seclusion or educational achievement, let alone any kind of effort to return students to their neighborhood schools.

I have spent a lot of time thinking about this issue, because it drives one of the single biggest problems facing disability policy. While there are plenty of providers making small (or not so small) fortunes off of the suffering and segregation of people with disabilities, the vast majority of people defending outdated and overly restrictive forms of service-provision are not bad people. A lot of them are very good people. Many of them entered the disability service-provision space during the early waves of de-institutionalization, when little information existed about supporting people with severe disabilities in an inclusive way and models like group homes, sheltered workshops and segregated day habilitation centers represented the best alternative most people knew to the horrors of Willowbrook and Pennhurst.

Somewhere along the difficult path¬†of building a scalable program model, their enthusiasm and passion turned to risk-aversion and an instinct to protect an established model they knew could provide a bare minimum of safety. Some evolved with the times, and decided to try new things to seek out more for the people they support, even if that involved some level of risk. Others didn’t. I think that was very wrong of them – but I also know that that resistance usually¬†comes from fear or inertia, not malevolence.

I am certainly not one to canonize service-providers and family members for the simple act of working in the disability space (some might observe that my work in the autism world over the last decade has been about countering such undeserved sainthoods). At the same time, I have a real and genuine respect for those who chose to dedicate their careers to affirming the personhood of people with severe disabilities at a time when virtually no one believed in disabled personhood.

That is still something I respect, which is part of the reason I see organizations like Special Olympics or the Arc of the United States, both of which I have significant disagreements and significant collaborations with, as fundamentally different from Autism Speaks and other organizations who engaging with does more harm than good. Within the developmental disability advocacy community, we often find ourselves working against people who may have been our coalition partners on another day or another issue.

Nowhere is this more the case than with respect to sheltered workshops and sub-minimum wage. For reasons I am going to try and describe in this post, progress on moving people with disabilities out of sheltered work and into integrated employment is politically difficult and faces opposition from very well intentioned families and agencies. At the same time, a proper understanding of the motivations that drive this opposition can be an extremely valuable tool in defusing it. It also matters because there are real challenges in crafting public policy that moves away from sheltered workshops without abandoning the people within them. This is very possible and has been done before Рbut it means understanding the real and legitimate anxieties that people have about that process.

How do sheltered workshops work?

Sheltered workshops are work centers which exclusively or predominantly employ people with disabilities. Many hold 14(c) certificates, so named after the section of the Fair Labor Standards Act allowing certain employers to pay disabled workers less than minimum wage.

Today, approximately 228,600 workers with disabilities are paid under 14(c), the majority of which are paid less than the minimum wage (a minority of employers also use 14(c) certificates to pay under the prevailing wage rate required by federal contracts). While there are more workers than that in sheltered workshops, the population covered under 14(c) tends to be the most focused on by advocates, as many garner little economic benefit from their work, some making less than a dollar an hour. For those who are interested, the Congressional Research Service produced a long and interesting history on Section 14(c) in 2005, available here.

Table 1: Number and Percentage of 14(c) Employers by Type of Employer Type of employer Number Percentage Work centers 4,724 84.2 Businesses 506 9.0 Hospitals or other residential care facilities 294 5.2 Schools 88 1.6 Total 5,612 100
This graph breaks down 14(c) certificate holders by type of employer as of 2001, when the Government Accountability Office conducted this study.

As indicated in the graph above from the Government Accountability Office’s 2001 analysis of Section 14(c), the vast majority of certificate holders are sheltered workshops (referred to by GAO as “work centers”), rather than private businesses. Since 2001,¬†this distribution has moved very little, though the total number of certificates is about half what they were previously. Today, the majority of sheltered workshops are also Medicaid providers, receiving payment from Medicaid for providing employment and related services to their employees on top of whatever contract payments the workshop receives for disabled workers’ labor. The graph below¬†(also from GAO) illustrates the breakdown of typical sheltered workshop funding streams. As you can see, few workshops could survive without funding from a state Medicaid agency.

Sources of Funding for Work Centers Funds from state and county agencies 46% Production contracts 35% Retail sales 9% Donations 2% Investment income 1% Other 7%
This pie chart shows the funding sources of the sheltered workshops surveyed by the Government Accountability Office in their 2001 report.

While workshops which receive Medicaid funding are nominally supposed to be preparing disabled workers for integrated work in the general workforce, this happens extraordinarily rarely. GAO reported that only 5% of the workers in centers they surveyed ever left the workshop for community employment. This does not appear to be for lack of interest on the part of the workers.

In a 2007 study in the Journal of Vocational Rehabilitation researching the preferences of workers with disabilities in sheltered workshops, researchers surveyed 210 adults with intellectual disabilities spread across 19 sheltered workshops as well as 185 of their family members. The majority of disabled workers and a slightly smaller majority of families expressed a preference for community employment over sheltered workshop placement. Interestingly, while youth and past integrated work experience greatly increased the likelihood that a person with a disability and their family members would favor community employment, severity of disability did not have a measurable impact either way.

More recently,¬†research from Rob Cimera at Kent State University suggests that in so far as sheltered workshop employees do move people into the general workforce, they are generally not better for their workshop experience. After comparing 4,904¬†workers with intellectual disabilities who left sheltered workshops for¬†supported employment services¬†designed to place them in jobs within the general workforce to the same number who went straight into such services¬†without a workshop experience, Cimera found the same likelihood of employment in both groups, with those who had never been in a workshop earning more money, working more hours and costing less to serve. For those interested in such things, Cimera’s analysis¬†found the exact same outcome for autistic adults within his original sample.

What’s the problem with sheltered workshops?

Most of the public outrage around sheltered workshops has focused on the issue of sub-minimum wage¬†compensation of workers¬†with disabilities. There is a reason for that. Whatever you think the minimum wage should be (or even if you don’t believe there should be one at all), excluding disabled workers from its protections creates an inequity. Sheltered workshop employees can be¬†paid as little as pennies an hour, deriving little economic benefit from their employment.

I recall one woman who I met when NCD sent a delegation to a Columbus, Ohio sheltered workshop to¬†hear from workers, families and providers on this topic. She spoke about the joy she felt when she first started working there, causing her to tell her family that she was going to take them all out to dinner (as she put it, “nothing too fancy”) after she got her first paycheck. When that paycheck came, it was for only 38 cents – not enough to¬†buy dinner, but more than enough to rob her of any sense of joy or accomplishment from her labor.

Sub-minimum wage employment typically works through one of two primary mechanisms Рpiece rate compensation or a commensurate hourly wage calculated via a time study. Under piece rate compensation, used typically in production or assembly work, a worker with a disability is paid per a unit of a product delivered. If the industry typically pays a piece rate, the rate is the same as that provided to the general workforce, with the caveat that workers who earn below the applicable minimum wage will not have their paychecks brought up accordingly.

Since piece rate compensation is relatively uncommon in the general workforce, most workshops who wish to use it will instead perform time studies, timing¬†a non-disabled worker who is asked to represent “100 percent productivity” and then converting¬†the number of units they are able to produce within a set time period (the Department of Labor’s¬†technical assistance suggests 20-25 minutes is sufficient) to an hourly production standard. Workshops are then able to calculate a piece rate by dividing the prevailing hourly wage rate by the number of units produced by the model non-disabled worker. So if a non-disabled employee pulled in to perform a time study is able to produce 100 widgets an hour and the typical prevailing wage for widget production is $10/hour, the workshop may then pay a piece rate of $0.10/widget.

Commensurate hourly wages are calculated through a similar mechanism, except the employee with a disability is also measured by a time study, and is then assigned a productivity percentage for up to six months. To provide an example, a janitor who is observed and determined by a supervisor to be 25% as productive as a non-disabled co-worker being paid $9/hour would be paid $2.25/hour.

There are a lot of problems with this system, rooted as it is in an economy that is vastly different from the one most of us work in today. Non-disabled “model” workers in time-studies (who are often drawn from agency support staff) may be particularly industrious, setting a standard far higher than that actually used in industry. Alternatively, disabled workers being assessed for their own time-studies may simply be having a bad day, which could result in their being stuck with low wages¬†for the next half-year. Particularly for workers with disabilities for whom high-pressure environments may exacerbate anxiety, motor issues or executive dysfunction, this seems to be a system designed to fail those caught in it. There¬†are very few of us – with or without disabilities – who would perform well under that compensation approach.

More importantly, sheltered workshop assessments of productivity often leave disabled workers stuck in jobs they aren’t suited for. Usually, when a job isn’t a good fit for a particular person, they look for another one. If they can’t succeed in the workforce at all, they leave it and seek additional education or look for a meaningful non-work way to spend the day.¬†For those in sheltered workshops, this is often not an option.

Workers with disabilities are frequently tracked into workshops straight out of school. In the Department of Justice’s investigation into Rhode Island’s Training through Placement and the¬†Harold A. Birch Vocational Program at Mount Pleasant High School, they found an incestuous relationship whereby students leaving public school were tracked directly into sheltered work.¬†Both the high school and Training through Placement maintained workshops, with the school acting as a feeder for the larger agency. To quote the Justice Department:

Students ages 14 to 21 with I/DD would participate in the Birch sheltered workshop for one or two 55-minute periods per day, sometimes to do work for TTP.¬† At times when the Birch sheltered workshop faced deadlines, some students were removed from their regular classes and spent large portions of their school days in the workshop.¬† Students were generally denied diplomas and received only ‚Äúcertificates of attendance.‚Ä̬† Students at the Birch sheltered workshop were paid between 50¬Ę and $2 per hour, or were not paid at all, no matter what job function they performed or how productive they were.

The school provided virtually no opportunities for students to experience or prepare for real jobs and made direct referrals to adult sheltered workshops as the students neared the end of school.¬† Because of the lack of integrated opportunities and direct referrals,¬† invariably, the¬† students would move on to an adult sheltered workshop,¬† TTP, after they left school instead of to integrated work places….

…Many TTP clients had specifically and repeatedly asked for help to find and be supported in real jobs in the community.¬† However, the state and city did not respond to their requests and did not make integrated employment services and community-based daytime activities available.¬† For example, one person with I/DD, who has worked at TTP for approximately 30 years, said that he asked nearly every year to work in a hardware store, yet he was never assessed or received services or supports necessary for him to do so. When asked how he would feel about working in integrated employment, he said, ‚ÄúI‚Äôd feel I accomplished something . . . something to be happy about.‚ÄĚ

This is not an uncommon problem. Even where schools do not possess relationships with particular workshops, state Medicaid agencies often set reimbursement rates for employment services that mean that workers who require support in order to find or maintain a job have little choice but to opt for a workshop placement. More importantly, workers with disabilities within workshops struggle to find support to leave the workshop environment, because the people charged with supporting their economic advancement are also their supervisors and have little incentive to lose their best employees.

The CRS report I mentioned earlier has a very useful insight, which I think captures the essence of the problem with workshops.

Institutional spokespersons, inevitably, wore two hats: first, as representatives of charitable institutions or related organizations; and, second, as employers of the disabled (or associates of such employers). In the latter context, they were employers of unorganized workers, by definition suffering a disability, likely disadvantaged economically, and perhaps unable effectively to represent themselves in the labor-management relationship. Calling upon the social services and sheltered workshop community for leadership had a certain logic: but, it also presented a potential conflict of interest. The pattern would persist to the end of the century.

At a basic level, sheltered workshops suffer from a fundamental conflict of interest. As a service-provider, the workshop is tasked with helping a worker with a disability to pursue their preferred career and maximize their earnings. As an employer, the workshop has little incentivize to lose their most productive employees or add to their payroll costs. Make no mistake: even non-profit workshops are businesses, and like any business, they will seek to maximize their profits and economic viability.

Workers with the greatest likelihood of success in the general workforce are those that workshop supervisors are most loath to part with, as they are depended on to allow the workshop to deliver on its contracts. Workers in sheltered workshops lack any recourse to improve their economic prospects Рbecause the people whose job it is to assist them in doing so have a vested interest in keeping them where they are.

How did NCD get involved on this issue?

When I joined the Council in 2010, sub-minimum wage and sheltered workshops were both just emerging as issues¬†on the national disability policy agenda. Attention to the issue had been raised by the Henry’s Turkey Service¬†case, a particularly sickening instance of the use of¬†14(c) alongside wholesale abuse and theft from workers with disabilities in Iowa. Within the developmental disability advocacy world, attention was beginning to shift from the long-term project of closing large, state-run institutions. With over a dozen states having no such facilities anymore and many others being well on their way to join them, the de-institutionalization fight seemed largely won. The focus could now safely shift to opening up the workplace to people with disabilities now enjoying the benefits of community life.

Near the end of 2011, two significant developments occurred that elevated both sub-minimum wage and sheltered workshops to the Council’s attention. The first was the introduction of the Fair Wages for Workers with Disabilities Act, a bill proposing to phase out 14(c) over the course of three years. While the legislation didn’t have a huge chance of passage, it served as a rallying cry for the community and pushed¬†organizations to take public positions on 14(c) who might otherwise have stayed on the fence.

The second was an informational bulletin on employment services released in September by the Center for Medicare and Medicaid Services, the federal agency tasked with overseeing Medicaid.¬†The majority of sheltered workshops are Medicaid providers, with their business model dependent on being able to receive payment from a state Medicaid agency on top of whatever profits they realized from service and production contracts. The new informational bulletin did not cut off Medicaid funding to sheltered work – but it did state that it must be time-limited in nature. While the bulletin¬†left to states how to define and enforce that time-limitation, it represented the first major policy statement from the federal government placing pressure on the sheltered workshop industry. Medicaid funds flowed to workshops in the name of “pre-vocational services” designed to prepare people for the real workforce. CMS’ new bulletin made clear that a workshop industry that kept its workers in the same place for decades on end would not be able to draw funds from¬†Medicaid for “preparing” them for the real workforce.

The Council began to debate the issue of workshops, sparked by requests from the advocacy community that we take a position on the Fair Wages legislation. In the beginning, there was no clear consensus on the issue. While I and several other members with backgrounds in the developmental disability community felt strongly that the Council should endorse a phase-out of 14(c) (though not necessarily on the timetable set out by the Fair Wages bill), others were more skeptical. The provider associations that opposed eliminating 14(c) worked alongside the disability rights movement on 9 issues out of 10. When it came to advocating for increased funding for disability services or stronger enforcement of the ADA and IDEA, they were usually alongside us. For many figures in the community, there was understandable confusion on how to come down on an issue where people they considered close colleagues were taking diametrically opposed sides.

After some debate at our quarterly meeting in December 2011, the Council decided to convene a fact-finding task force of NCD members¬†tasked with investigating the sheltered workshop issue and developing recommendations for a Council position. At the time, it¬†felt like kicking the can down the road. I was unhappy that the Council didn’t take a more committed position from the start. However, in retrospect, the decision to convene a task force was one of the best things to come out of my time on NCD. Had I been successful in pushing through a brief Council position endorsing a phase-out of 14(c), we might have garnered some brief media attention and added our name to a growing list of other entities that had announced the same position.¬†Instead, the task force set as its goal a comprehensive investigation of the sheltered workshop issue. That investigation would eventually give us the knowledge, legitimacy and consensus to not only recommend eliminating 14(c), but to put forward a real plan as to how it could be done responsibly and effectively.

NCD allocated funds for the members of the task force to travel to seven states between March and May 2012. Our goal to visit both sheltered workshops and integrated work sites and talk to the employees with disabilities, co-workers, family members, service-providers, policymakers and other relevant stakeholders in the area. The visits were educational, and not only for those members on the fence regarding sub-minimum wage. Even those of us already personally committed to 14(c) abolition learned a tremendous amount about the practical, policy and political steps that were necessary to accomplish that transition in a way that did not leave¬†the people served by sheltered workshops without access to meaningful¬†day and employment services. The information we received would give us a blueprint for writing recommendations¬†on the sheltered workshop issue and gave me new insight into the challenges facing state policymakers in moving publicly funded disability services towards integrated employment outcomes. I’ll be sharing more details on those experiences – and any insights that came out of them – in Part 2 of this post.

Tune in Friday for reasons why families defend workshops, strategies states and advocates can use to move towards integrated employment and information on inclusive service options for people with disabilities who cannot yet find community employment. Till then, feel free to share and comment!

16 thoughts on “(Almost) Everything You Need to Know About Sheltered Workshops (Part 1 of 2)

  1. Thank you for explaining this in a tone/vocabulary/format that I (a non-policy expert) could understand, but providing enough details where I didn’t leave thinking, “I know this is the right thing to do, but WHY?” As a parent (of persons with disabilities nearing transition age) who entered back into the workforce as a direct support professional for a community day hab program, I spent my days trying to offer dignified and meaningful support in an environment that left me feeling conflicted and confused. Trying to advocate for an idealized policy while spending my days in a certain reality made it really difficult to process my thoughts. This post really helped me focus and grasp what I am advocating for and why. Looking forward to Part 2.

    Liked by 2 people

  2. I too am looking forward to next weeks article. I am a parent of a person who worked in a sheltered workshop and benefited from it, but I saw others that were trapped just as you described. I am pushing for a transformation of our local system. It’s ugly and scary just now. So many people are afraid to change, while at the same time acknowledging they would like something better.

    Liked by 1 person

  3. Can’t wait for part 2, particularly about how to serve the folks who will never be able to enter competitive employment. I’m a retired clinical psychologist and a person with a disability. I remember our efforts to empty out state hospitals and our hopes that community mental health services would serve folks better. That good movement failed the most needy and they are now often our homeless and/or are in jails and prisons receiving poor mental health services. Let’s hope we do this major policy change with less unintended negative consequences. Thanks for an excellent post.

    Liked by 1 person

    1. Definitely something I plan on covering, both in the next post with respect to employment, and in a subsequent post on de-institutionalization. One issue that I don’t think is adequately acknowledged is that this country has had three significant de-institutionalization movements, each reflecting a different population, type of institution and outcome.

      One, intellectual and developmental disability, has been an unequivocal success, with the majority of people with developmental disabilities living in the community with much higher quality of life than in institutions. A second, physical disability/aging, is still underway, with many states in the comparatively early stages of moving people out of nursing homes and into community services (despite considerable evidence that people do better in the community). The third, mental illness/psychiatric disability, has been more of a mixed bag, largely because the community side of the equation was not funded to the same degree as has been the case in the first and second categories.

      Often, people’s understanding of de-institutionalization confuses elements from one of these three trends with another. I will probably do a post on that at some point, talking about the three different institutions under Medicaid and the resulting history of three different (but inter-related) de-institutionalization movements.

      Liked by 2 people

      1. I also want to thank you for this article. My son is 21 and I am just trying to figure out all the issues. This is helping. My son will never be able to have employment as he only has the cognitive of a 9 month old. So he is in a different type of day program. My understanding is that there is a movement to close these as well as the workshops. Will you be explaining how these things work together? I would love some examples of successfully “programs” where people as involved as my son were in the community and it didn’t require the parents planning each day. Again thank you for the information.

        Liked by 1 person

      2. Definitely important to discuss. Part 2 delves into day programs, and there is some emphasis on shifting people out of segregated program models there – but not to put the burden on families instead. We are seeing the emergence of new ways of approaching day programming, which bring services to people where they want to go doing what they want to do, instead of requiring people to be present in a specific center or facility. It parallels the de-institutionalization process, which did the same thing for residential supports: allowing services to be delivered anywhere, not just in a facility run by a provider organization.

        I’ll be talking briefly about those options in Part 2. If there seems to be enough interest in it in the comments, I might do a whole blog post on integrated day services, time permitting. Whether or not someone is able to find community employment (and I think you’ll find that with a high quality job coach and customized employment services, there are possibilities for people most would never have expected to accomplish it), integrated day services are going to be necessary as we shift to non-congregate service models. Even many people who are employed benefit from services that assist them in participating in preferred recreational or volunteer opportunities on top of their employment. After all, most of us do more things during the day than just going to work and coming home.

        Liked by 2 people

  4. This is an excellent start to DIALOUGE on disability that has been sorely missing as policy continues to develop. I am especially glad you start on the issue of employment which I consider the largest barrier to community integration – and, is not an issue limited to DD/ID. I await part 2 and am sharing your post with people in Ohio. LOVE the blog name!

    Liked by 1 person

    1. So glad you liked it, Linda! Working with you was one of many benefits of my time on NCD. Of course, in part 2, I’ll be sharing recollections of things you experienced too. I hope you’ll share your thoughts and would really welcome that discussion.

      Liked by 1 person

  5. Ari, Thanks for the thoughtful and well-written article. I appreciated the honesty about how divisive this issue can be. I found the following quote to be very helpful. “For many figures in the community, there was understandable confusion on how to come down on an issue where people they considered close colleagues were taking diametrically opposed sides.”

    Many of us are philosophically on the same side of this issue, the challenge is not the “WHAT” or the “WHY” it is the “HOW.” And, what I fail to see in many of the conversations is the importance of bringing the private-sector into this conversation. We can end subminimum wage with the strike of a pen; but what we can’t guarantee through legislation is that REAL JOBS with REAL WAGES will be available when the law changes.

    Liked by 1 person

  6. What I’d like to see is the expenditure side of the pie. There is an easy first step: pay EVERYONE minimum wage and prevailing wage. If their business model can’t adapt, its over. The despicable practice of CEOs and Directors of NON-profits being paid excessive salary and benefits by exploiting people with significant disabilities has no place in tax dollar funded services. Charity my A$$.


  7. This is a well written article and includes some interesting thoughts mixed with some intentionally inflammatory language. While I fully support funding employment choice, having government compel people to give up their jobs when no alternative is available is offensive. Have you seen the latest jobs report? Study the states that have already taken this approach. People are working a few hours a week and are isolated at home the rest of the time.

    In my state CIE is a right and is fully funded for anyone who selects it as part of their person centered plan. What frustrates the professional advocates is that the ingrates who are working in these “isolating settings” are not all interested in their offer. Naturally if they aren’t interested in transitioning they must lack the enlightenment of those same well funded advocates and should, therefore, be compelled through legislation and executive action to do as they are told.

    We hear a lot about the soft bigotry of low expectations. I suggest that telling someone they aren’t capable of selecting their own work setting is about as bigoted as you can be. If you want real choice make CIE funding available and allow people to see the efficacy of the choice. Over time people will transition.. at a pace they and their families choose.


  8. I started a small non-profit similiar to your comments made on September 21. It incorporates a number of things that relate to recreation, volunteering, social opportunities, community based classes and more in addition to supported employment. It’s going well for those involved.


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