Last Sunday, I posted Part 1 of “(Almost) Everything You Need to Know About Sheltered Workshops”. In it, we discussed why good people end up running bad services, how sub-minimum wage works, the problems with the sheltered workshop business model and how the National Council on Disability got involved in this issue.

At the end of our last post, the Council had just authorized a small fact-finding task force to learn about sheltered workshops and supported employment programs. Let’s pick up where we left off…

Why do families defend sheltered workshops?

In late 2011, the Council began a new initiative to understand the factors that drive sub-minimum wage for people with disabilities and come up with a plan to end it. We visited sheltered workshops and supported employment providers in seven states to inform ourselves on the issue before compiling recommendations.

To understand what NCD learned in those site visits, and the policy recommendations we put together for the Council’s later endorsement, it is important to spend some time highlighting where the opposition to sheltered workshop closure comes from. While some of it is driven by large provider agencies defending a business model that funds high salaries and subsidizes other less profitable programs, a lot of it is principled. There is considerable anxiety, particularly from families, about losing the functions that sheltered workshops currently serve. I’d like to highlight two reasons for this.

Sheltered Work as Respite Care and Day Habilitation

For a considerable number of families and a smaller number of providers we spoke to, the sheltered workshop was not viewed first and foremost as an employment program. For them, the workshop represented a place for people with disabilities to go to have something to do during the day, regardless of earnings. Many parents expressed concern that if their child did not have access to the sheltered workshop as a form of day activity, they would not be able to maintain their own employment. A common refrain was that if the sheltered workshop closed, “my son/daughter is going to end up spending their day on the couch watching television.”

Respite care, essentially giving a break to family members providing support to a relative with a disability, is a very real need for families whose adult relatives with developmental disabilities live at home, as is the case for almost three-fourths of adults with intellectual and developmental disabilities. There is a great deal of evidence supporting respite’s effectiveness in dramatically reducing institutionalization. One of the more recent studies I’m familiar with found that spending just $1,000 on respite care within the last two month reduced the risk of hospitalization for an autistic child by eight percent. (Of some interest to those reading this blog, the same study did not find access to behavioral interventions had any significant effect in reducing hospitalization.)

Access to respite historically took place out of home, and sometimes involved people with developmental disabilities being temporarily institutionalized, a model that certainly is not consistent with our values. In recent years, respite has shifted to a service that can be delivered anywhere, from in a person’s family home to at a volunteer or community activity of a person’s choosing. The point is to provide some form of meaningful engagement that can relieve family members of support work for a period of time. Many parent defenders of sheltered workshops look to them to accomplish this – in short, they want their children to have something to do during the day so they do not have to stay home to support them. This is not an unreasonable request.

Despite that, a sheltered workshop is by no means the only option for offering people with intellectual and developmental disabilities meaningful service-provision choices during the day. In the 1980s, then Assistant Secretary of Education of the time Madeline Will oversaw the creation of grants to states to establish and scale supported employment services. Supported employment brought supports like job coaching and other employment services to jobs in the community. Rather than workers with disabilities being forced to work in a segregated workplace in order to access employment supports, supported employment specializes in assisting those workers in finding a job consistent with their strengths, interests and priorities. Eventually, supported employment became a standard service option in most states’ Home and Community Based Services (HCBS) programs.

Supported employment includes not only assisting a person with a disability in locating a job, but also working with the job-seeker and the employer to craft job responsibilities that both match the worker’s strengths and the employer’s needs. The typical supported employment process begins with a “discovery” period, whereby a job-seeker with a disability is exposed to multiple different workplaces to help identify strengths and preferences, an particularly important process for job-seekers with communication disabilities.

Supported employment can also work with employers to adjust job descriptions and even craft new ones that meet both business needs and worker skill sets, far beyond the scope of what is legally required under the Americans with Disabilities Act. As of 2013, 113,271 workers with intellectual and developmental disabilities were receiving supported employment services on an ongoing basis to support their inclusion in the workforce.

The classic response to this is simple: not all disabled job-seekers will be able to find community employment. This is, of course, true. Significant disparities between state community employment rates of people with intellectual and developmental disabilities show that the right strategies can drastically boost the number of workers with significant disabilities who find community jobs. Still, just like the general workforce, not everyone will succeed. More sophisticated opponents of workshop closure have expressed concern that a person with a disability who leaves a workshop and does not find community employment will end up in a day habilitation center.

Day habilitation centers are segregated facilities where people with psychiatric and developmental disabilities often find themselves, performing make-work activities, arts and crafts and other things determined by a program schedule with little choice on the part of the people forced to spend their day accordingly. Day habilitation is not a new service – Medicaid funding to such settings predates sheltered workshops in many parts of the country. Medicaid got into the employment services business in the first place in large part to make sure that people with disabilities had an option other than day habilitation facilities.

Defaulting into day habilitation centers is a real concern for people with significant disabilities and their families. There is considerable evidence that facility-based day habilitation is worse than even a sheltered workshop environment, carrying with it all of the segregation without any form of training or economic renumeration. Still, this is not the only option for people with disabilities who do not find community employment. Using the same logic that brought employment services out of sheltered workshops and respite care out of institutions, more and more states are shifting how they deliver day habilitation services to more integrated models.

For example, the State of New Jersey sparked considerable outrage from provider organizations earlier this year when they proposed requiring that at least 75% of a person’s day habilitation services take place out of a separate facility. The state also proposed that there should “be no overall facility schedule for participants; each individual should have a unique schedule reflecting their interests and goals.” While the final plan backtracked somewhat from the proposal, the state still committed to moving day habilitation towards a more integrated model of services set by the preferences of the person being supported, outside of a segregated day activity center. Other states have been following similar paths. Vermont, which became the first state in the nation to eliminate the use of sheltered workshops in 2003, is one of a number of states to only deliver day habilitation within integrated settings. An integrated day habilitation program, where a person can choose how and where they spend their day, is a much better outcome than both a sheltered workshop or a segregated day activity center.

Many workers leaving sheltered workshops will find higher pay and better jobs in community employment. This may even be the case for most, depending on the workshop and the people served within it. Others may instead find that integrated day habilitation models offer a way to spend the day that is more meaningful and more integrated than a sheltered workshop environment. For much of the second group, sheltered work provided very little (if any) economic benefits. Someone compensated to the tune of a few cents an hour is hardly employed.

In these cases, sheltered work represented a form of backdoor respite care or day habilitation program: something for people to do during the day. And if the purpose of the workshop is not employment, the question that we have to ask is simple: can we not offer people better choices of how to spend their day than being shuttered in a facility pretending to perform manual labor? Of course we can, and in states across the country, we are. Lack of knowledge of those options represented one of the biggest sources of anxiety for families the Council met with in our travels.

Fear of Loss of Benefits

The second most common fear on the part of families (and even some people with disabilities) was the potential that workers may lose Medicaid benefits as a result of higher earnings outside of a sheltered workshop. Sheltered workshop employees are usually Supplemental Security Income (SSI) recipients, a program managed by the Social Security Administration that provides a small monthly check and immediate access to the Medicaid program for people with disabilities without sufficient work experience to qualify for Social Security Disability Insurance. While the higher paycheck that integrated work would bring could easily offset any reduction in SSI earnings, loss of access to Medicaid – the payer for the services that enable many people with disabilities to stay in the community with their basic needs met – would be catastrophic.

At one point, this would have been a very legitimate concern. Prior to 1980, SSI recipients who exceeded the income caps for the program could very easily get kicked off of Medicaid. In 1980, Congress passed the Social Security Disability Amendments Act of 1980, creating a three-year demonstration program allowing disabled workers to maintain access to Medicaid when their income rose above the level at which their SSI cash payments would be cut off. The program, referred to as 1619b for the legislative section that authorized it, allowed workers to maintain Medicaid eligibility if their continued employment would be seriously inhibited if they lost eligibility for Medicaid services. Congress later made this provision permanent in the 1986 Employment Opportunities for Disabled Americans Act, signed by President Reagan. The precise income level that workers with disabilities can earn up while maintaining Medicaid eligibility is set by a state by state formula calculated based on the average Medicaid expenses in that state, ranging from $27,244 in Alabama to $65,144 in Connecticut. Anywhere within that range is more than enough to allow the vast majority of those leaving sheltered workshops to maintain Medicaid access.

Other work incentive programs exist that allow people to maintain Medicaid benefits long after their earnings rise above the level at which SSI cash payments would be cut off. Section 201 of the Ticket to Work and Work Incentives Improvement Act allows states to set up a “Medicaid Buy-In program“, authorizing workers with disabilities to buy-in to Medicaid under terms set by the state. This represents a significant policy advance, as states can set income caps far higher than those under 1619b and can also waive the draconian asset cap for those using the Buy-In. To date, 46 states have made use of the Medicaid Buy-In. While each state sets different income, asset and other limits to the program, most states have left ample flexibility to allow workers with disabilities leaving workshops to stay on Medicaid.

During the Council’s site visits, we found limited knowledge of these work incentive programs, despite the fact the oldest of them were created over three decades ago. Many of the workshops had begun before the creation of 1619b – and some of the people with disabilities within them started working there almost as long ago. Even among younger workers and their family members, there was an understandable confusion as to how to navigate the fairly complex rules within the SSI program. Many people with disabilities had been sent into the workshop after achieving initial success in integrated employment because their family members were under the mistaken impression that their Medicaid coverage was at risk if they kept earning higher wages.

What practices promote better quality services?

I chose to focus on family member opposition in the previous section, but of course the Council spent time with many other stakeholders. People with disabilities expressed a consistent interest in earning more money and moving into more interesting community jobs, though many did express appreciation for the social opportunities even segregated programs afforded over what was available living at home. Service-providers usually defended whatever business they were in, whether that was sheltered workshops, supported employment or a mixture of both. This too was not shocking.

Of more interest were our conversations with state policymakers and advocates in the states who had succeeded in closing workshops while expanding supported employment. In these discussions, we learned a great deal about the strategies states could undertake to move away from the workshop model in a responsible way, without abandoning people with severe disabilities in the process.

Understanding Provider Business Models

Vermont was the state we learned the most about systemic change from. As mentioned earlier, the state had closed its last workshop in 2003, completing a process they had begun three years previously. Talking with leaders of the state Developmental Disability Service agency, I got a sense of the strong political will that was required to initiate that process in 2000. “We decided we would fund what we believed in and not fund what we did not,” commented one state leader, “That made the difference.”

To operationalize that belief required working with providers. Vermont had a number of advantages over other states, most notably the lack of a strong provider lobby to oppose the move. As a small state, policymakers also had the ability to build a relative consensus in support of shifting to integrated employment services. In a larger states like California or New York, the task of building political support for employment related systems change would likely be much harder.

Still, opposition to the transition existed. In early conversations with workshop leaders, one state policymaker recalled asking a simple question: “What if we just moved the folks who we can find jobs for in the community out of the workshop?” The answer came quickly from a workshop executive: the workshop’s economics simply would simply not work if that happened, because “with those people gone, no one would be available to do the work to meet our production contracts.”

This is a crucial point, and one that recalls the Congressional Research Service’s point about conflict of interest from Part 1. Sheltered workshop economics depend on their maintaining the employment of workers who likely could be supported to find jobs at or above minimum wage with community employers. Without that population, the workshop would not be economically viable and could not fulfill their contracts.

Because of that, one of the first and most important steps that states seeking to make progress on integrated employment need to undertake is a moratorium on new sheltered workshop placements. Without that, workshops will work aggressively to funnel capable workers with disabilities into their workforce, trading on the fears of family members and close relationships with schools and other public programs to do so. In short, as long as a sheltered workshop has an “open front door”, they will seek to replace those who leave with workers who might otherwise succeed in community employment.

It’s a rotten system, and one that should be shut down as soon as possible. Still, we quickly came to the conclusion that the focus of advocacy efforts to close workshops should work carefully to preserve the agencies running them. Many of the biggest workshop operators – Arc, Easter Seals and Goodwill affiliates, for example – were also the biggest supported employment providers in their area. Even where that was not the case, the agencies that operated workshops had often developed truly useful expertise in supporting people with significant disabilities in working productively.

With appropriate retraining and political will on the part of agency leaders, many workshops can and do “convert” to a supported employment model. To this day, the Vermont chapter of APSE – the country’s leading association of supported employment service-providers and supporters – runs an annual “Conversion Institute” devoted to teaching sheltered workshop leaders how to shift to a supported employment business model. If they can be convinced to evolve, today’s sheltered workshops represent vital elements of tomorrow’s supported employment provider network.

To encourage these transitions, states must clearly message their “seriousness” through a moratorium on new workshop placements and a set, time-bound schedule for phasing out the use of workshops for the existing population. State policymakers should not stop there, however. They have an even more powerful tool at their disposal: Medicaid reimbursement rates.

As discussed earlier, the majority of workshops and 14(c) certificate holders are also Medicaid providers. States can set Medicaid rates to sheltered workshop and supported employment providers to encourage the former to shift towards the latter. Some of this is as simple as paying more for supported employment and integrated employment outcomes than for sheltered workshops and segregated ones. (Several case studies on adjusting rates to incentivize employment are available here, for those with reason to delve into the details.)

A few states have adopted an even more innovative model, reimbursing employment providers for the number of hours that a worker with a disability works rather than the number of hours of job coaching or other services provided to them. The federal Center for Medicare and Medicaid Services will soon be issuing more detailed guidance on such “pay for performance” approaches.

Rate setting is a complex task, and generally benefits from some degree of external expertise. A number of national experts and technical assistance bodies are available to assist states in that process, like the State Employment Leadership Network of the National Association of State Directors of Developmental Disability Services or the Office of Disability Employment Policy’s Employment First State Leadership Mentoring Program, which pairs high-performing states with low-performing ones.

State policymakers need to ensure that service-providers are reimbursed at higher rates for people with more complex support needs. Many states use the Supports Intensity Scale for these kinds of determinations. At the same time, not all supported employment arrangements are created equal. Providers may feel an incentive to create small “mini-workshops” in the community through enclaves or mobile work crew models, unless their reimbursement models specifically incentivize supporting people to find employment most consistent with their interests on an individual basis (by paying higher rates for providers that help people with disabilities find jobs on an individual basis, instead of placing them in a small group cluster of jobs set aside for people with disabilities).

One of my Council colleagues represented a provider association in his home state of Massachusetts. Based on the experience he had during the site-visits, he began a dialogue with his state government and provider, family and self-advocate stakeholders on how to end the use of sheltered workshops in MA. The result – a blueprint on getting the State of Massachusetts out of the sheltered workshop business – ended up creating a concrete timetable for action in MA and serving as a rationale for the state legislature to commit bridge funding to help providers transition to supported employment models. In short, this has been done before – and we can do it again, where we choose to.

Get VR to the Table (Kicking and Screaming if Necessary)

States like Vermont and Washington, both of which had relatively high-performing employment service systems, also made sure to build strong collaborations with vocational rehabilitation (VR) agencies. VR, for all of its flaws, is the agency in state government with the most experience in disability employment and – your mileage will really vary on this, depending on the state you live in – the strongest relationships with the employer community. Technically, VR should be the first point of contact for helping people with disabilities find a job, while Medicaid funding can serve to sustain supported employment services after VR takes the initial steps of helping a person find a job and get acclimated to their workplace.

In practice, for people with intellectual and developmental disabilities, VR all too often deems them “unemployable”, leaving the Medicaid system responsible for paying for the full spectrum of employment services, from job search and discovery to ongoing service-provision. Medicaid is often ill-suited to this role, being predominantly a healthcare program, and the refusal of VR to serve this population results in Medicaid agencies needing to replicate skill sets that VR should already have. States are trying to address this by building memorandums of understanding between state Medicaid agencies – usually represented by the Developmental Disability operating division – and VR for the purpose of articulating how the two systems will work with each other and who will pay for what.

In the states we visited, however, VR and Medicaid still worked without consistent coordination – except where the VR agency had committed funding for joint infrastructure projects that gave it an incentive to serve people with intellectual and developmental disabilities, having already sunk money into preparing to do so. For example, Vermont prepared for its sheltered workshop closure by using VR funds to provide small grants to local providers to build supported employment programs.

There are a lot of things that VR and Medicaid can do together that would be nearly impossible for either to manage alone. In Vermont, we found that the use of VR funding for provider grants, combined with traditional Medicaid reimbursements to those providers, gave supported employment agencies the ability to “follow-along” with people who no longer required ongoing employment supports and be available in case people fell into crisis again. This would have been very hard to do with Medicaid funding alone, where expenditures usually have to be tracked to a specific type of service and beneficiary.

States need a clear set of “rules of the road” to allow both VR and Medicaid to invest in employment outcomes – and to allow both to take credit for successes and be held accountable for failures in the process. These things usually only develop when strong new leadership came into play, either from a Governor’s office or a particularly visionary VR or state Developmental Disability Services director. Without new leadership or external pressure, the existing VR system does not play well with others.

Leverage Federal Intervention

For the last fifteen years, advocacy efforts at securing more inclusive service options for people with disabilities have benefitted from a powerful tool. In 1999, the Supreme Court ruled in the landmark Olmstead v. L.C. case that people with disabilities had a right under the Americans with Disabilities Act to access any service that a state provided in a segregated setting in an integrated one as well. The Obama Administration’s Justice Department has been exceptional at enforcing Olmstead, bringing litigation that has forced states to not only close institutions but drastically expand community services across the country.

Though Olmstead was originally talked about mainly in the context of getting people residential supports out of institutions, the Justice Department has expanded the legal theory Olmstead uses to cover employment in recent years. In landmark cases in Oregon and Rhode Island, the Justice Department has required states to close new entrances into sheltered workshops, articulate a plan to shift people currently within them out of those settings and drastically expand available supported employment services.

Olmstead litigation is definitely “the stick” when it comes to incentivizing states to move away from sheltered workshops. But in my experience, it is one that is not always unwelcome. State leaders operate under any number of domestic political constraints. As such, they are often secretly quite pleased when the federal government relieves them of responsibility over deciding a difficult problem by requiring an otherwise politically difficult course of action.

While I wouldn’t go so far as to say that people in state government celebrate when the federal government sues them, it wouldn’t shock me if many are not altogether unhappy being forced to take steps they might otherwise find politically impossible. In our visit to Oregon, where the Justice Department’s litigation had recently begun, many of us sensed a cautious tenor of hope that the litigation would open up new doors to better services. In other states, fear of the Justice Department stepping in was prompting action that might otherwise not have been possible.

Engage with self-advocates and families

Change always has to be politically sustainable, particularly when it comes to disability service-provision. Wherever possible, provider associations should be worked with to convince them to cooperate with sheltered workshop conversion. Often, providers heavily resist change – in which case engaging with self-advocates and families becomes even more important.

Self-advocacy groups generally support these types of transitions – but may be too weak or dependent on provider organizations who provide financial or logistical support to effectively lobby. I’ve long argued that one of the most important things a state can do to prepare for progressive systems change is invest in the independence and self-sufficiency of a statewide self-advocacy association. By helping self-advocacy groups wean off the provider associations that often provide logistical support for meetings, transportation and other factors, self-advocates will have a much greater ability to pursue their own agenda to policymakers, even when it is at odds with providers.

Families will generally split on workshop closure. Some, particularly younger families, will be enthusiastically in favor of it. Others, particularly those whose children have been in sheltered workshops for a long time and remember the period before them, will be adamantly opposed. The states making the best progress on winning over families start from a position of understanding the major concerns that drive that opposition, as discussed earlier.

Clear and ongoing communication is necessary from the beginning of the process. Families need to hear clear solutions on what will prevent their loved one from being left without anything to do during the day if they don’t find a job. By beginning the process with a clearly articulated plan for expanding benefits planning, integrated day services and respite along with supported employment, many families can be won over. And of those that are not, frequently that transition will occur after the closure process has already taken place. In Vermont, we met with a mother who had led the charge against closing the state’s last workshop in 2003. Today, a decade later, her daughter was successful in supported employment, and her mother marveled at how experience in an integrated workplace had made her happier and more communicative.

Wherever possible, however, skeptics should be brought in to the process and allowed to brainstorm with state policymakers as to how to address their sincere concerns. Where opposition is implacable, state policymakers and advocates shouldn’t hesitate to go over the head’s of organizations that may be poorly representing their constituents and talk directly with individual family members and providers who are open to being convinced. Often, even opponents of workshop conversion will participate in a constructive planning process once it is clear that it will be taking place anyway.

Meaningful Integrated Day Services

Integrated day services, as discussed earlier, represent a crucial point on the employment and day services continuum. This is not just the case for people who don’t find integrated employment. Frequently, people with disabilities leaving workshops for supported employment find themselves working less than full time. Even if they are making more money working 5 hours a week at or above minimum wage than at 40 below minimum wage, many people still want additional service options to fill more of their day. If a person needs more intense support in order to access volunteer or recreational activities, it is important to have a funding stream that can provide that, lest someone be left without access to the community during the time they aren’t working. Integrated day habilitation can allow for that.

After the Council produced our initial report to Congress on phasing out sub-minimum wage, we began to work with congressional offices to craft legislation that would incentivize states to begin these transitions on their own. States respond to federal financial incentives, and we wanted to leverage the Medicaid program’s dollars to encourage states to pursue these transitions. The result, the recently introduced Transition to Independence Act (S. 1604), includes within it a strong definition of integrated day services:

(5) INTEGRATED DAY SERVICES.—The term “integrated day services” means services integrated in and supporting the full access of individuals with disabilities to the greater community to the same degree as individuals not receiving services that are provided consistent with all of the following:

(A) No overall facility or program schedule for the individuals receiving such services.

(B) Each individual receiving such services has a unique schedule reflecting the individual’s interests and goals.

(C) Activities take place on an individual basis or in small groups of individuals who choose to be served together.

(D) The majority of time spent receiving such services takes place within the broader community rather than within a single-site, fixed site, or center-based program for individuals with disabilities, regardless of the program size.

(E) The services are provided consistent with the requirements of section 441.710 of title 42, Code of Federal Regulations.

The purpose of this definition is to ensure that integrated day services are meaningfully different from the facility based programs of years past. This means more than just having activities take place outside of a fixed-site. It also means that people should be able to set their own schedules, pick their own activities and have the help necessary to make informed choices about those decisions. Too often, programs pass for “integrated” when they simply bus people with disabilities around to pre-arranged activities in clusters of individuals who didn’t choose to be served together. Integration isn’t just about location – it is first and foremost about choice, autonomy and control over one’s own life.

Will new Day and Employment Services support people with severe disabilities?

One more question often comes up during these transitions: will new day and employment services still serve the same people as the old system did? After all, if it is easier to support people with less complex needs in integrated settings, won’t providers focus most of their energy on the people who are easiest to assist?

This is a legitimate concern, albeit one that has been addressed successfully in other contexts. The closure of state institutions led to a similar conversation, with many opponents of de-institutionalization worried that it would benefit people with less complex needs while leaving those with more significant ones out in the cold. This did not occur, largely because of careful planning and investment that focused on ensuring the needs of all people with disabilities leaving institutions. A similar process can and is being implemented in states pursuing sheltered workshop closure and conversion.

In the de-institutionalization context, one of the most important tools for ensuring that people leaving institutions would be well served was the Money Follows the Person program. Created by the Deficit Reduction Act of 2005, Money Follows the Person authorized the federal government to cover 100% of the service costs for people with disabilities leaving institutions for the first year after they left an institutional environment. This ensured that people with disabilities leaving an institutional setting were at the front of the line for services, even if their state had a waiting list for those who had never been in an institutional setting.

While Congress has not (yet) created a Money Follows the Person for Integrated Employment, states can still imitate the policy implications of such an initiative, by requiring that those leaving sheltered workshops and facility-based day programs be put at the front of the line for new employment and day services. The NCD-inspired Transition to Independence Act would create similar incentives to Money Follows the Person at the federal level, by offering states bonus payments for shifting people in sheltered workshops and facility-based day habilitation programs to integrated employment and day services.

As mentioned earlier, many states use “tier” systems like the AAIDD Supports Intensity Scale to set payment rates higher for people with more complex needs. This is a critical component of making sure people with the most severe disabilities are not left behind. Case studies on this topic show that rates can be aligned not only with particular outcomes, but with the level of complexity of a person’s needs. Particular effort can be given to encourage certain provider agencies to specialize in serving people with “hard-to support” disabilities in integrated settings. Some states have even given start-up grants to provider organizations to focus on those populations, in exchange for agreeing to serve as providers of last resort. If rates are set high enough, providers can build a sustainable business model supporting people with very complex needs in an integrated, inclusive way.

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There are a wealth of other things that I could cover here, but I think we’ve probably covered enough for two (very long) blog posts. I have deliberately chosen to focus these posts on the issues that are most relevant to state policy, since I suspect my average reader is much more likely to be engaged there. At the federal level, the disability advocacy community remains actively engaged on things like putting pressure on 14(c) certificate holders with the ultimate goal of abolition, reforming contract preferences that continue to send hundreds of millions of dollars to sheltered workshops and shifting the incentives states operate under to encourage integrated employment outcomes.

If you are interested in reading more about those things, consider taking a look at the recently published interim report of the Department of Labor’s Advisory Committee on Increasing Competitive Integrated Employment of Individuals with Disabilities. Despite the clunky name, the Advisory Committee is the home of some of the most interesting discussions on disability employment policy today. For the severely wonk-ish amongst you, I highly recommend it.

A Note: Anyone who spends more than a few years working in public policy falls into jargon and inaccessible language, often without noticing it. If there is anything in this post that you don’t understand or don’t follow, feel free to comment with your questions. That also goes for those of you who have disagreements or conflicting views – I would love to hear from you too. As always, I reserve the right to moderate comments which are abusive, make personal attacks or seem to be made in bad faith.

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. 😛 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 – institutions, 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 – most likely – the 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 – but 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.

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.

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 – piece 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 “certificates of attendance.”  Students at the Birch sheltered workshop were paid between 50¢ 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, “I’d feel I accomplished something . . . something to be happy about.”

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 – because 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!