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The Livelihood of People with Disabilities

Let’s talk some more about the history and implications of the minimum wage and the sub-minimum wage. What we’re after here is to encourage people to sign the Petition to Support Fair Wages for Workers with Disabilities.

The TIME Act (H.R. 1377, short for Transitioning to Integrated and Meaningful Employment Act), has been around for a while and has bipartisan backing. A factsheet packed with details can be found on the National Federation of the Blind website, along with a description of the kind of future we are looking for:

The EmploymentFirst Movement promotes new concepts such as “supported” or “customized” employment that are successful at producing competitive integrated employment outcomes for individuals with significant disabilities that were previously thought to be unemployable.

National philosophy

Hamilton Nolan suggests that we are all hypocrites, “enjoying the low consumer prices that come with ultra-low wages being paid to workers abroad.”

Our own purchasing habits reward companies for paying wages that are sure to keep their workers in poverty for life. We soothe ourselves by saying that these desperately poor workers are still better off than they would be without a job; yet we would reject that argument if an employer here tried to use it to pay us less than the minimum wage.

“Count your blessings! You are better off with any job at all, no matter how unsatisfactory, than with no job.” That does sound exactly like the attitude of the government and employers toward Americans who are expected to work for a sub-minimum wage because they fall under the specially tailored group of exceptions spelled out in Section 14(c) of the The Fair Labor Standards Act.

As Richard R. Troxell, cofounder and President of House the Homeless, and CEO of the Universal Living Wage campaign, says:

If that work is important enough to get done, then certainly the person doing it whether they are 16 or 60, or brown or green or tall or short or blind or sighted, etc., should be paid for the work they produce. If you, as an employer, are using the work of an individual to run your business then you, as a compassionate human being, should pay them for a 40-hour week an amount that affords them a roof (other then a bridge) over their head. If you, as a member of our compassionate capitalistic society, are unable to include a commensurate number of physically/mentally challenged individuals into your work force, then perhaps you should lose your business license.

At any given time, there may be several pieces of legislation floating around that all address the same problem with varying degrees of sincerity. The proposed Raise the Wage Act (June 2017) is more backed by Democrats and wants to increase the federal minimum wage for everyone to $15 by 2024. (The only way some things can become law is by assuring the moneyed class that nothing needs to change just yet. Also, a lot can happen in six years.)

A nice feature of this legislation, should it ever pass, is that it would also get rid of the sub-minimum wage provision. This would affect not only people with disabilities but workers in restaurants and other service industries, and the teenagers.

Not all employers continue to get away with chicanery. Michelle Chen reported from West Virginia last year:

This summer, federal regulators revoked the wage exemption of a West Virginia–based nonprofit “Work Adjustment Center” purporting to provide rehabilitation services, which owed about $48,000 in back wages to 12 workers doing assembly production jobs, after falsifying prevailing wage assessments.

While there has been limited action at the federal level, three states — Vermont, New Hampshire and Maryland — have passed legislation that phase out use of the sub-minimum wage in their respective states. In several states, sheltered workshops are being shut down.

In her extensive and very accessible article, Chen quotes David Hutt of the National Disability Rights Network:

The payment of sub-minimum wages is often the result of a failure to recognize the tremendous advances in services and supports created since the 1930’s that allow individuals with disabilities to be fully inclusive members of the workforce, as well as the unique abilities of each individual.

Reactions?

Source: “Transitioning to Integrated and Meaningful Employment Act, (TIME Act) (HR1377),” NFB.org, undated
Source: “We Need an International Minimum Wage,” Gawker.com, 05/22/13
Source: “A new bill could boost pay for the disabled–to at least the minimum wage,” WashingtonPost.com, 06/06/17
Source: “People With Disabilities Aren’t Entitled to the Minimum Wage,” TheNation.com, 09/07/16
Photo credit: Kheel Center, Cornell University Library via Visualhunt/CC BY

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How Toxic is the Sub-Minimum?

The Fair Labor Standards Act (FLSA), enacted in 1938, allowed for the granting of Special Wage Certificates, so that both companies and nonprofits could pay disabled people less, because of being less productive. Recently, House the Homeless urged readers to consider signing the Petition to Support Fair Wages for Workers with Disabilities, which aims to repeal Section 14(c) of the FLSA.

Compensation is definitely an issue. 14(c) provides for no floor, no bottom level of pay. People were found to be working for 2 cents per hour, and similar absurd amounts. Several persuasive arguments are contained within the petition. They boil down to, in the words of Kimie Beverly, Government Affairs Specialist at the National Federation for the Blind (NFB), “If there is going to be a minimum, it should be for everyone.”

Employers who favor retaining the sub-minimum will point out that some folks truly are so disabled, it just doesn’t make any sense to pay them more than a pittance. But… the individuals derive from the earning experience a self-esteem that is priceless. Or so the spin goes.

In a substantive overview of the various pro and con arguments, Sarah Blahovec, the author of The Huffington Post article and an advocate for people with disabilities, has this to say about that:

However, is that satisfaction considered more important than the fair treatment of hundreds of thousands of workers who could be fully productive with the right training, and who need their jobs for meeting living expenses, as opposed to just providing a sense of pride?

Companies can get individual certificates, and overall, they employ far fewer people on the sub-minimum level than the nonprofits do. If they didn’t hire people with disabilities they would not have acquired their juicy government contracts in the first place, and big companies can certainly afford to pay minimum wage at least.

But despite rules about productivity testing and other aspects of the relationship, the amount that a person can be paid is pretty much arbitrary. The chance for advancement is slim, on account of an interesting wrinkle in the law, which excludes supervisory and managerial positions. If a sub-minimum wage employee were to be promoted, they would have to be paid the going rate, and the company obviously would not gain as much profit.

It doesn’t get any easier

Even in the circumscribed world of sheltered workplaces, it is difficult to rise. Non Profit Associates, or NPAs, also get an exemption under the requirement that “75% of total direct labor hours must be performed by people who are blind or have other significant disabilities.” (This does not mean that three-fourths of the employees have to be disabled, but that three-fourths of the billable hours of work is done by them.) Problem is, if people were promoted in rank, it would take them out of that pool, which would affect the bottom line, and less money would be available for the top executives.

Unintended consequence or not, the law does the opposite of what it set out to do. Rather than bring the perceived outsiders into the society’s mainstream, it cordons them off in segregated employment ghettos. The original goal was to achieve the “most integrated setting” that would promote the mingling of non-disabled people and those with disabilities. As things stand, the instances of anyone transitioning from sheltered employment into the larger world, are few and far between.

How it evolved

In 1971, the Javits-Wagner-O’Day Act required that all federal agencies should buy various supplies and services from nonprofit agencies that employed people with disabilities. It defined who could do what, and under what circumstances.

After many years, in 2006, the program that potentiates the law was renamed AbilityOne. It’s administered by the Committee for Purchase from People Who Are Blind or Severely Disabled, which decides what commodities and services the government should purchase.

Interestingly, its biggest customer is the Department of Defense, and it is under the authority of Homeland Security. AbilityOne coordinates the activities of 550 NPAs in more than 1,000 locations, and helps to employ 46,000 people including wounded veterans.

Still, critics, believe that AbilityOne abets in the maintenance of barriers to integration in the workforce. Because the pay scale is based on performance, there has been litigation over how performance is measured. The feeling in many sectors is that AbilityOne basically does not do what Congress intended, and that it needs to be retooled to reach consistency with the intentions of the Rehabilitation Act.

Not the first try

Many attempts have been made to relegislate the provisions of 14(c), but so far without success. In 2014, President Obama issued an executive order setting the hourly minimum at $10.10, which is a big improvement over 2 cents. But as long as that minimum was met, it still allowed workers with disabilities to be paid less than others. And it only applied to companies with federal contracts, which are not that many. According to Kimie Beverly, only 7,000 people are in that category, out of 194,000 currently affected by the sub-minimum wage.

In 2014 the Workforce Innovation and Opportunity Act (WIOA) tried to beef up the provisions for paying disabled youth in particular. A letter sent last month by the NFB to the Secretary of the U.S. Department of Education said:

This 75 percent direct labor requirement, as stated in the current statute and in the letter, is inherently incompatible with WIOA because the work settings are disproportionately filled with employees with disabilities. These settings cannot be considered integrated. Rather than incentivize work in the community, the direct labor ratio requires large-scale retention of employees with disabilities in majority-disability workplaces.

Under Congress’s new definition of “supported employment,” people with disabilities cannot be paid subminimum wages unless the employer is integrated.

But if the workplace is thoroughly integrated, how can it fulfill the rule that 75% of the hours will be worked by people with disabilities? It seems to be an instance of dueling, mutually incompatible laws.

(To be continued… but meanwhile, please sign the Petition to Support Fair Wages for Workers with Disabilities.)

Reactions?

Source: “It’s About TIME: Ending Subminimum Wages for Workers with Disabilities,” HuffingtonPost.com, 06/10/15
Source: “U.S. AbilityOne Commission,” undated
Photo credit: Commercial Cleaning Maryland via Visualhunt/CC BY-SA

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Work, the Minimum Wage, and the Young

The minimum wage was created in 1938 immediately following the Great Depression. It is set by the federal government, although a state or city can adjust it upward, but not downward. The whole point of the minimum wage was to ensure that if a person put in 40 units (hours) of work, they’d be able to afford the basics: food, clothing and shelter.

It was also seen as a way to alleviate the financial harm suffered by employers having to put up with workers who didn’t know jack. It was intended to be an entry-level amount paid to brand-new employees, until they learned the necessary skills and gained enough experience to be worth holding on to. It was meant to be a status or stage of development that a person might occupy for a limited time.

Yet somehow minimum wage transmogrified into a category of job; and rather than being a temporary circumstance, it became type of person, expected to exist on the same low pay no matter how long they stayed. Meanwhile, so the newbies would still make less than the longer-term workers, a new class was created — the sub-minimum wage.

As we have seen, employers come up with all kinds of reasons to avoid paying a higher minimum. There is the “wage compression” problem, which means “Then everybody else in the company will want a raise too.” Regarding the youth, there are two schools of thought. One is expressed by Erin Shannon:

The overwhelming majority of economic studies shows that a high minimum wage has the greatest negative impact on people with low-skills, such as teen workers entering the workforce.

Those who favor a low minimum, and even a sub-minimum wage, claim that the teenagers who are affected don’t really need the money, and just want to buy fancy sneakers. (They ignore the fact that only about a quarter of minimum wage earners are teens — the rest are adults with adult responsibilities.) The scrooges say that a higher minimum — or any minimum at all — is harmful to the very people it purports to care about most, because it will cause jobs for kids, and especially for dark-skinned kids, to disappear, period.

Last year, the National Employment Law Project (NELP) announced that “the research does not back up those claims,” and the references can be found in a fact sheet compiled by that organization. About the kids, NELP says this:

Teen workers are likely to be from struggling households that depend on the teens’ additional income to make ends meet. Moreover, significant numbers of employed teens are students working their way through two or four year colleges — in fact, nearly half of college students today work full time while going to school.

The scrooges want us to believe that when the minimum wage is raised, this shocking intrusion reverberates throughout all businesses at every level, and horrible things happen, and it’s all the fault of young people — especially teens of color — who have the nerve to expect to make enough money to live on. Yes, this sounds like asking a lot, when we hear that nobody any anywhere in the U.S. can afford a one-bedroom apartment on the minimum wage.

But there are kids aging out of foster care who would happily live in a commune, or a car, or share a single room with someone working the opposite shift. There really are teenagers who have to take care of themselves, and to help them do it benefits everyone.

More nonsense

Minimum-wage scrooges claim that small businesses are already so stressed they can’t possibly afford to pay anybody enough to live on. However, when Chicago was in the midst of its “Fight for $15,” John Arensmeyer, founder of Small Business Majority, said the following:

The vast majority of small business owners already pay their workers more than the minimum wage in order to attract and retain quality workers. By raising it across the board, more Americans will have more money to spend at small businesses. This will help them create jobs, which strengthens the economy overall.

Nice! But here is how ornery and perverse the scrooges are. A writer named Michael Saltsman labeled that Small Business Majority survey a scam, saying:

Were SBM actually interested in the impact of a higher minimum wage on small businesses, the majority of employers they surveyed would have employees earning the minimum wage. Instead, a full 85 percent of the businesses polled by SBM had no employees earning the minimum.

Read that paragraph a few times and see if it makes any more sense the last time than the first. And why are the scrooges so worried about small businesses, anyhow? About two-third of minimum wage earners work for places that have over 100 employees — like corporate welfare queen Walmart where, as Robyn Pennacchia points out, “the CEO makes more in an hour than most of his employees will make in a year.”

The scrooges practice what may or may not be willful blindness, for instance by taking it for granted that certain things are immutable. James Dorn wrote for Forbes:

Moreover, if the minimum wage cuts into profits, there will be less capital investment and job growth will slow.

But maybe profits don’t always have to remain at the obscene level that corporations have become used to. Maybe the system could change in ways that would accommodate the workers as much as the shareholders.

Dorn gets all sniffy about Costo:

The company’s CEO made waves when he endorsed a higher minimum wage in March of this year. Yet the membership warehouse giant has a unique retail business model (you pay to be a customer) that allows them to pay above the minimum wage and earn nearly $10,000 in profit per employee.

Well… maybe, since that is such a successful model, more businesses should adopt it! Which is exactly how “the market” is supposed to work. Somebody figures out a profitable angle, and the competitors take a cue and get a clue, and do likewise. You’d think a bunch of hardcore conservative capitalists would realize that, but they seem to suffer from a brand of selective cognitive dissonance on certain topics.

Again, Dorn says, “In order to remain profitable, businesses must either dramatically raise prices… or find ways to maintain their business operation with manageable costs.” By which he means, keep the pay down. So in all the big, wide world, those are the only two choices. But hey, boys, how about cutting those executive salaries and bonuses? The only reply is silence.

Erin Shannon, defender of low minimums and sub-minimum training wages, says, “The lower wage justifies the extra work employers must put in to teach that 16-year-old how to be a productive employee.”

Or — never mind that. Maybe we could do things a different way. A boss could forget about that sub-minimum stuff, and maybe even start people at better than minimum! The company could let prospects know that on-the-job training is one of the perks. As an employer, you don’t have to do it, but you’re doing it.

You could look at it the way mixed martial arts trainers do. If aspirants come without experience, there are no bad habits for you, the employer, to train them out of. You can mold them into the exact right kind of employees for your business. And if you pay them the minimum or better, instead of some insulting training wage, maybe they will be more willing to pay attention and respond favorably to your employee-forming efforts.

Reactions?

Source: “Give teens a leg up — expand the training wage,” SeattleTimes.com, 01/18/17
Source: “A ‘Training Wage’ for Teens or New Hires Would Hurt New York’s Workers and Undermine Responsible Employers,” NELP.org, March 2016
Source: “Chicago Minimum Wage Workers ‘Fight for $15’,” HispanicBusiness.com, 04/24/13
Source: “Minimum Wage Legislation, And The Small Business ‘Survey’ Scam,” Forbes.com, 05/09/13
Source: “Most minimum wage workers are adults who work for large corporations,” DeathAndTaxesMag.com, 05/10/13
Source: “The Minimum Wage Delusion, And The Death Of Common Sense,” Forbes.com, 05/07/13
Photo via VisualHunt

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Training Wage or Hidden Injustice?

First, before getting into today’s topic, remember that next Tuesday is Bridge the Economic Gap Day, a day for action. Everything there is to say about this yearly tradition is contained in last year’s post, except that this time, it’s Tuesday, September 5, a week from today.

What is commensurate wage?

Since 2009, the federal hourly minimum wage has been $7.25, and the government has designated which workers it applies to. A whole separate area of law describes who can be paid less, and under what circumstances. There are two major exceptions to the requirement to pay minimum wage, and a person may fall under one or the other, or maybe even both.

It seems that the two can be mixed-and-matched, depending on the needs of the company that applies to be certified for the privilege of paying less. This is known as a commensurate wage, which has more dignity than “sub-minimum,” a word that could be termed meaningless, since “minimum” already means “least.”

One affected group are workers under 20 years old, who can be subject to a 90-day training period at $4.25 per hour. This is based on the idea that it will take them a while to get up to speed. During the probationary period, they will not only learn how to do the particular job, but will adapt to the mores of the workplace, such as timely arrival. When the probationary period ends, they will graduate to the ranks of regular employees. But more about this next week.

The federal rules

At the moment, the subject is disability. The Fair Labor Standards Act is enforced by the Wage-Hour Division (WHD) of the U.S. Department of Labor. For detail-oriented readers who want to follow up, the Field Operations Handbook is available online.

This excerpt is from section 64c00:

A subminimum wage is a wage paid a worker with a disability that is commensurate with that worker’s individual productivity as compared to the wage and productivity of experienced workers who do not have disabilities performing essentially the same type, quality, and quantity of work in the vicinity where the worker with a disability is employed.

Some examples of disabilities that may affect a worker’s earning or productive capacity include blindness, intellectual or developmental disability, mental retardation, cerebral palsy, alcoholism, drug addiction, and age.

Age alone is not considered a disability, but it is often concurrent with other disabling conditions. Disabilities range from mild to severe, in one or more of the following areas: “impairments in perception, conceptualization, language, memory, and control of attention, impulse, or motor function.”

The main thing to know is, an employer can pay a sub-minimum wage only when the disability impairs the person for the specific job. In other words, there would be no justification to pay a blind coffee-taster less.

For the employer, several rules apply. There are standards about work measurement and time studies and how the hourly commensurate rate should be calculated, and the company has to promise to reevaluate the job performance every six months or when the actual requirements of the job change.

The WHD civil servants are specially admonished about the importance of their oversight duties “because many of the workers with disabilities paid at sub-minimum wages have little knowledge of their rights under the various acts enforced by the WHD or may be unable to exercise them.”

Potential for mischief

Apparently, the three-months training period exception can be applied to disabled workers as well as those under 20. Some critics feel that, as a Washington state news editorial phrased it, 680 hours might be excessive:

That seems like a long time for a person to get the knack of a minimum-wage job, which by its very nature requires a relatively low level of skill. Would it really take a person 85 days (of eight-hour shifts) to learn a minimum-wage job?

In Seattle, these matters were hotly discussed when state and city minimum wages were adjusted. Washington’s Department of Labor & Industries had designated four sub-minimum wage categories, called “student learners,” “handicapped workers,” “adult learners,” and “student workers.”

Journalist Anna Minard wrote in her 2014 article:

The state has issued only five certificates in the last five years — four for individual handicapped adults, and one for student workers at a boarding school. But while the state program has been small, there’s no telling how many employers would apply for certificates with Seattle’s new higher wages — and how creatively they might try to interpret the existing but rarely used state codes. Opponents of training wages fear this could become a huge loophole for businesses to exploit.

One problem with the training period is that it encourages the unscrupulous employer to engage in an outright scam. Rather than retaining people at full pay, they might let them go when the probationary period is over, and hire a new batch of “trainees” at a discount. Michelle Chen wrote:

Advocates are also campaigning to stop federal subsidies for segregated sheltered workshops and “training” programs, where workers tend to languish indefinitely in jobs with virtually no redeeming educational value.

Please sign this petition!

House the Homeless hopes the reader, now armed with some background information, will take another step. The National Federation of the Blind is petitioning on behalf of all American workers with disabilities to end the Special Wage Certificates that allow the lower pay scale. The petition itself is a model of persuasive eloquence, and the points are worthy of consideration.

Reactions?

Source: “Field Operations Handbook,” DOL.gov, 09/21/16
Source: “Address flaws in bill creating ‘training wage’,” BellinghamHerald.com, 02/04/13
Source: “What’s the Deal with ‘Training Wages’?,” TheStranger.com, 05/28/14
Source: “People With Disabilities Aren’t Entitled to the Minimum Wage,” TheNation.com, 09/07/16
Image courtesy House the Homeless

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Disability Wage or Exploitative Loophole?

Eighty percent of disabled people are said to be excluded from the American workforce. Even for those who are deemed employable, the picture is not bright.

According to the Americans with Disabilities Act, private-sector employers with more than 15 employees are not allowed to discriminate against disabled people in the area of pay. They are also supposed to make “reasonable accommodation” (e.g. wheelchair accessibility) for these workers without reducing their pay to recoup the cost of this accommodation (e.g. wheelchair ramp).

But section 14(c) of the Fair Labor Standards Act (FLSA) allows these same employers to pay less based on productivity, which on the surface seems fair. Why should a company write the same paycheck to someone who makes one widget per hour, as to the expert who makes five widgets per hour? Good point. But however sensible this may be in principle, the day-to-day realities are many and tangled.

The employers’ side

Because so many kinds of human limitations are included under the umbrella term “disabled,” complications arise. Stephen Hawking would be a different type of employee from a someone whose cognitive ability was devastated from the start by fetal alcohol syndrome, or from a military veteran whose PTSD makes the most basic human interactions problematic. Whether fair or not, the scientific genius, regardless of the elaborate support system he would need, will be a greater asset to the company, and there’s no getting around it.

The employees’ side

This means, writes Taylor Leighton, that “some disabled workers can make significantly less than the minimum wage, in some cases even less than a dollar per hour.” Prospect.org says “hundreds of thousands” of disabled workers earn around $2 per hour — with “many receiving a lot less.”

In the documentary film, Bottom Dollars, made in the state of Washington, a member of the organization Rooted in Rights looks at records from other states and remarks, “There’s one person down here who is making two cents an hour.”

To gain skinny-paycheck permission, an employer has to obtain a special certificate from the Labor Department’s Wage and Hour Division. The exception is said to affect between 400,000 and 420,000 disabled Americans, although the exact number is hard to get a bead on.

In 2014, one source said:

Overall, according to the most recent statistics from the Labor Department’s Wage and Hour Division, there are nearly 2,000 certified employers paying more than 216,000 workers a sub-minimum wage.

At any rate, Michelle Chen writes, in recent years the rules have been relaxed here and there, resulting in even less opportunity for disabled workers. She says that employers “can effectively pay whatever they want — if the firms certify the wages are ‘commensurate’ for their duties (an arbitrary standard prone to exploitation).”

Private sector employers can circumvent section 14(c) by characterizing their jobs as training programs, and consequently get way with paying some people less than $1 per hour. Taylor Leighton reports:

Disabled Americans enter these programs under the assumption that they will gain valuable skills that will lead to real-world jobs and financial independence… Many never graduate from the program and are stuck making subminimum wages while employers benefit from the cheap labor.

Another writer notes that some workers make “only pennies an hour for mundane, repetitive tasks.” When analysts get their hands on the numbers, they conclude that less than 5% of the disabled workers in segregated, subminimum wage shops will ever transition into an integrated work environment. In some cases, of course, it may be that the individual is simply not capable of taking on more complex job responsibilities.

But part of the reason for this stagnation can be explained in another way. Apparently, once an employee has learned a task, their “training” status can be perpetuated by changing the task, so the person is once again in training.

NEXT: What is being done, and what needs to be done.

Reactions?

Source: “Can employers actually pay disabled Americans below the minimum wage?,” PolitiFact.com, 08/12/16
Source: “Below the Minimum No More,” Prospect.org, 05/30/17
Source: “Law allowing lower wages for disabled draws scrutiny,” king5.com, 06/01/17
Source: “Some disabled workers making pennies per hour,” ChicagoTribune.com, 02/10/14
Source: “People With Disabilities Aren’t Entitled to the Minimum Wage,” TheNation.com, 09/07/16
Source: “Transitioning to Integrated and Meaningful Employment Act, (TIME Act) (HR 1377),” NFB.org, undated
Photo credit: The Library of Congress via Visualhunt/No known copyright restrictions

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What’s Up with Goodwill?

The National Employment Law Project calculated that two out of three low-wage workers are employed by large corporations. Only one-third work for small businesses, which throws shade on the argument that raising the minimum wage will destroy the economy by slaughtering small businesses. No, two-thirds of the stingily-paid are in the employ of huge, profitable enterprises.

And some underpaid Americans work for Goodwill Industries, much to its shame. Investigative journalist John Hrabe has called the nonprofit exploitative, a racket, and the worst charity in America. Investigating for Watchdog.org, he learned that most Goodwill branches were paying disabled people less than the federally determined minimum wage.

Hrabe’s reportage contains sentences that are scarcely believable, such as this one:

More than 100 Goodwill entities employ workers through the Special Wage Certificate program, a Depression-era loophole in federal labor law that allows organizations to pay subminimum wages to people with disabilities. According to Goodwill, 7,300 of its 105,000 employees are subject to the minimum wage exemption…

Well, it’s a charity, right? It takes in used items of all kinds, and sells them cheaply to the economically disadvantaged. Maybe there simply isn’t enough money to go around. Except, there is. Goodwill was paying out more than $50 million per year to its top earners, with some individuals making $1 million a year. Hrabe gives many shocking examples of executive compensation that has really gotten out of hand.

And the travel expenses? Nearly $40 million, for a year’s worth of travel for the upper echelon. What possible need is there for people who run a charity to travel so much? Goodwill isn’t a thirsty young startup, trawling for business. It’s a long-established, staid, and supposedly trustworthy nonprofit organization. And nowadays, we have the Internet and video-conferencing, and all that good stuff. So the question is worth asking — what’s up with the urgent need to go somewhere?

Busted

Goodwill was accustomed to skating along, enjoying an excellent reputation that received bushels of good press — and didn’t expect its labor practices to be questioned. Some reporters latched on in the early 2000s, and found that the workers were making as little as 20 cents per hour, but their complaints did not gain much traction. In 2012, it was 22 cents an hour.

When you hear someone disparage the minimum wage because it supposedly prevents less-abled people from ever getting jobs, don’t listen. That is a downright fib, as they very well know or ought to. In government, for every regulation, there is a waiver. In this case, a thing called the Special Minimum Wage Certificate allows companies to pay some people far less than the legal minimum.

So, even if the minimum wage went up to $50 an hour, the government would still be willing to cut a deal for businesses that find and exploit the Special Minimum Wage Certificate loophole. And even though Goodwill is nominally a nonprofit, and doesn’t pay taxes, it is one of those privileged businesses.

Hrabe learned some details from Brad Turner-Little, Director of Mission Strategy at Goodwill International, Inc. The special work certificates are only good for two years, and a massive amount of paperwork is supposed to prove that the organization complies with all the applicable regulations. Consequently, the journalist asks:

Why is Goodwill spending so much time and money on this bureaucratic nightmare? Remember, Goodwill claims that the sub-minimum wage policy helps them save money and hire more workers.

It would be nice to reassure readers that this is just a history lesson, and that all discrepancies have been remedied, but sadly this is not the case. In 2016, after four months of investigative work, Henry J. Cordes wrote a highly revealing series for the Omaha World-Herald.

Among other problems, the local Goodwill execs were quite disproportionately overpaid, in comparison with other Goodwills and other nonprofits. Here is a rather incendiary quotation:

While Goodwill Omaha runs job training and assistance programs that serve thousands annually, nearly all of those activities have been funded by government grants and contracts — not the $4 million in annual profits generated by Goodwill’s thrift stores in eastern Nebraska and western Iowa. Even its signature program that employs disabled job trainees within its stores is primarily funded by school districts.

Whoa! Did he just say Goodwill takes money from school districts? In what universe are schools so lavishly bankrolled that they can financially support an charitable organization whose bigwigs collect gigantic paychecks? This alone should be enough to inspire some real public backlash.

Reactions?

Source: “Goodwill Minimum Wage Loophole Will Shock You,” HuffingtonPost.com, 05/15/13
Source: “Goodwill’s Charity Racket: CEOs Earn Top-Dollar, Workers Paid Less Than Minimum Wage,” HuffingtonPost.com, 09/25/12
Source: “Goodwill Omaha: No Culture of Thrift,” DataOmaha.com, 10/22/16
Photo credit: Mike Mozart (JeepersMedia) via Visualhunt/CC BY

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Nonsense Around a Corporate Decision

Apparently, the minimum wage issue is vulnerable to all kinds of potential spin, depending on particular number-crunching techniques, how various terms are defined, and so forth. As in so many fields of human endeavor, unreliable data can doom to failure any attempt at meaningful analysis.

Putting that aside, there are things the voting public forgets, for better or worse. For instance, these few sentences from Garry Reed say a lot:

It’s not so much that the minimum wage is back in the news again as it’s always in the news. No matter how high it’s raised there will always be someone demanding that it be raised more. They miss the point that the minimum wage is not, was not, and never should be meant to be a “living wage” and no one should ever think that it ought to be.

Keeping that in mind, it is not surprising that in no state of the Union can a full-time minimum wage worker afford to rent a one-bedroom apartment. It is difficult to reconcile a full-time worker’s inability to afford shelter with the fact that corporate executives pull down as much as $10,000 PER HOUR.

Here is a repetition of the assertion that we just don’t understand what the minimum wage is meant to be, phrased this time by Sara Lin:

The minimum wage was never intended to be a “living wage” on which one could support oneself, let alone a family… The minimum wage was meant to be an “entry level” wage, that is a minimum wage allows an employer to hire and pay a lower wage to someone who has no job skills, let alone any experience in holding down a job.

That last bit is important. Anyone who has owned or managed a small business has stories to tell about absolutely clueless new hires. Through ignorance or carelessness or just plain inability to function in a socially acceptable way, a single employee can cause enormous damage. But they still have to be paid!

In some businesses, elderly retirees are welcomed because at least they’ve got the basics down. A person accustomed to the world of work is familiar with the concept of showing up on time, wearing shoes rather than bedroom slippers. It is possible to empathize with employers who resent compensating incompetence.

Of course, salary isn’t the only factor. There are unemployment and work comp insurances to be paid. And the phenomenon known as “wage compression,” which is what happens when starting salaries are too close to whatever the existing workers are getting. Not surprisingly, the old hands feel unappreciated and indignant, and ask for raises.

Big businesses

It is appropriate to worry about effects on small businesses, but statistically, most minimum wage workers are employed by companies with over 100 employees — in some cases, thousands and thousands of employees, who are slighted by such tricks as keeping their hours under the “full-time” limit, to avoid paying benefits. As a result, America is full of people working at two or three different minimum-wage jobs that add up to well over “full-time hours,” who are still not entitled to any benefits.

One of the behemoth corporations is Walmart, famous for the fact that its employees are so poorly compensated, many are on food stamps and other forms of government assistance financed, of course, by the taxpayers. At the top of our page is an internet meme discussed by a writer named Steve Straub in a piece titled “Another Ridiculous Liberal Minimum Wage Meme DESTROYED by Facts.”

Here is how the writer purports to annihilate the concept that Walmart could easily afford to pay its workers more:

Earlier this year, Walmart raised the starting wage for more than 100,000 of its employees. This move reportedly cost at least $1 billion to implement, though the long-term costs could potentially be far worse.

Supposedly, because of this gesture, Walmart had to not only fire 1,000 employees from its home office, but close five of its stores across the nation, affecting another 2,500 employees. As Straub predicted, it did get worse, because only weeks later Walmart announced it would close 154 stores, affecting 10,000 workers.

All, supposedly, because the extraordinarily generous (yes, that is sarcasm) company raised some workers to $9 an hour. Straub winds up with:

When either government or businesses raise the minimum wage, it skyrockets costs.
To compensate, businesses then lay off workers. So yes, some workers wind up with a more livable wage, but at the cost of a bunch of other workers winding up with NO WAGE at all!

Economists could argue about the validity of this conclusion all day. The point here is: How does any of this realistically discredit the disputed meme?

Let’s review the text:

The Walmart family is worth $144 billion. Tell me again why they can’t afford to pay their workers $15 an hour?

The question still stands. As the old saying goes, the Walmarts already have more money than God. With the family taking such a huge cut of the profits, ordinary people are indeed still asking why the Walmarts can’t afford to pay their workers better, or even a lot better.

Straub’s article didn’t even put a dent in that question. There is nothing ridiculous about wondering why the executives and shareholders of Walmart are justified in taking such a large share. The only ridiculous part is that they are able to get away with it.

Reactions?

Source: “There’s More to Minimum Wage Jobs Than Wages,” SoapBoxie.com, 03/23/17
Source: “Minimum Wage Should Not Be Living Wage,” CivilBeat.org, 05/17/13
Source: “Another Ridiculous Liberal Minimum Wage Meme DESTROYED by Facts,” TheFederalistPapers.org, 11/26/17
Image by Other 98.com

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Things People Say About Minimum Wage

When all else fails, minimum wage opponents become fervently patriotic, because freedom is at stake. Shouldn’t a person have the right to work for any amount they are willing to accept? There is one little problem with that. If everyone believed it, we would never have had labor unions, and America would have never become the economic powerhouse that gives patriots something to wave the flag about.

A version of the red, white and blue sentiment was phrased by Michael Rathbone, former policy researcher at the Show-Me Institute:

If workers do not feel that they are being fairly compensated, they are free to look for employment elsewhere.

The trouble is, America is full of people fearfully hanging onto awful jobs. Hasn’t this guy ever heard of one-industry towns? If the catfish processing plant is the only local business, you work at the catfish plant, or else as a bartender, and there are only so many bartender jobs.

On the other hand, Garry Reed wrote in an article for Soapboxie.com:

It’s true that some people get stuck in low-paying jobs and can’t get unstuck through no immediate fault of their own… Maybe they dropped out of school, had a kid, had another kid, never learned to manage their money, did drugs, weren’t willing to leave family and friends and familiar surroundings to seek out a better life, so they took the first job they could get and turned it into a rut.

So, in other words, he’s saying it is their own fault. They quit school, didn’t learn how to balance a checkbook, started drinking, didn’t use contraception, or possess quaint old family values that require caring for elderly or disabled relatives. These people, according to Reed, are victims of their own bad choices.

In which case, expecting the government to make things better, by forcing employers to pay a minimum wage — and even increase it every now and then — is grossly unfair. Making businesses subsidize low-paid workers is “wrong” and constitutes an injustice.

The thing is, somebody is going to wind up subsidizing those low-paid workers who need food, medical attention, etc., and it’s going to be the taxpayers. Shouldn’t it be instead the businesses they work for?

But wait — Reed perceives even more injustice perpetrated upon employers who, after all, provide valuable training:

And in some cases the employer of a low-skilled part time worker just may be training someone who becomes a future competitor who out-works, out-performs and out-competes that former employer and runs him or her out of business.

Wait a minute. It seems like, in line with the writer’s own tough-love philosophy, if somebody does the job better than the company where they started out, that too should be accepted as a price of freedom and the marketplace!

This sentence written by James Dorn in a Forbes article is an example of one type of the mind-boggling statement that comes up in these discussions:

But if a worker is producing $5.15 per hour and now the employer must pay $9 per hour, there will be little incentive to retain her…

The verb “produce” is interesting. While it has yet to be proven that any Chief Executive Officer, anywhere on earth, even the head of Walmart, “produces” $9,000 per hour, it never occurs to any of these theorists that, just maybe, executive compensation should be cut.

Dorn writes:

Employers have more flexibility in the long run and will find ways to economize on the higher-priced labor.

By economizing, he’s talking about such strategies as holding back on raises for the more established, higher-paid employees. Well hey, how about economizing on the millions doled out to CEOs, rather than penalizing long-term employees?

Incidentally, arguing some aspect of the minimum wage debate, another Dorn sentence goes like this:

If one gets empirical results that go against the grain of long-held economic laws, one should be very wary of advocating policies based on those results.

What??? He’s not talking about legislation, but law in the sense of the law of gravity, the laws of nature; and it doesn’t even make any sense. If empirical results — otherwise known as reality — go against “long-held economic laws,” then maybe they weren’t laws in the first place. But this is an example of the kind of mumbo jumbo that surrounds minimum wage discussions.

In his 2013 OurFuture.org article, Richard Eskow looked at another objection:

There’s also their much-beloved fantasy of the minimum wage as “racist.” Seriously. It’s a dirty argument to make — but then, there’s a lot of money at stake.

He refers to a writer named Jonah Goldberg who asserted that the original promoters of the concept were racists who instituted minimum wage because it would harm black workers, saying, “The Wall Street Journal even calls an increased minimum wage ‘The Minority Youth Unemployment Act.'”

There is one very frightening potential consequence of minimum wage legislation that is even worse than the outsourcing of jobs to workers overseas: the probability that increasing numbers of jobs will be filled by robots. Twenty years ago, many people thought the idea that supermarkets could get along without cashiers was ridiculous. Now, grocery chains have installed self-checkout operations that not only eliminate cashier jobs, but turn customers into unpaid workers for the corporation.

Reactions?

Source: “The $22 (An Hour) Question,” ShowMeDaily.org, 03/31/13
Source: “There’s More to Minimum Wage Jobs Than Wages,” Soapboxie.com, 03/23/17
Source: “The Minimum Wage Delusion, And The Death Of Common Sense,” Forbes.com, 05/07/13
Source: “Real Faces of the Minimum Wage,” OurFuture.org, 04/21/13
Image: United Food and Commercial Workers Union

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People, Robots and Minimum Wage

One of the most interesting aspects of the ongoing minimum wage debate is a warning that we will all be replaced by mechanical substitutes. An article from the Cornell Roosevelt Institute echoes a point that House the Homeless has made many times: that a person who works full-time ought to be able to support himself or herself without needing to apply for food stamps or other government assistance to get by.

There are pro and con arguments: If workers are better paid, they can buy more stuff and boost the economy in general. Human misery is ameliorated, because people don’t need to work multiple jobs just to survive. When people are happier at their jobs, they don’t engage in slacking, sabotage, embezzlement, or other acts harmful to the business. They stay in place, and employers are not faced with the expenses associated with hiring and training.

Jack Robbins quotes experts who do not foresee a higher minimum wage as leading inevitably to a catastrophic result:

According to economist Arindrajit Dube, a relatively small increase in the minimum wage could lift 4.6 million laborers out of poverty. Longer-term effects could reduce the number of people living below the poverty line by 6.8 million. Sarah Lemos of the University of Leicester finds that a 25% increase in the minimum wage would only increase aggregate prices by .4%.

On the other hand, raising the minimum wage is said to increase inflation and unemployment. When the cost to businesses is raised, business fires people, so rather than X number of workers struggling along, you get Y number of workers doing okay, and Z number of workers back out on the streets without any job.

But then comes the most devastating possibility of all: When human employees cost too much, businesses respond by installing robots. An Oxford University economist theorized that 47% of American workers are at risk of having their jobs automated — in other words, taken over by robots of one type or another, even if they don’t appear humanoid.

A counterargument to that is, whenever possible, businesses are going to go ahead and install automation anyway, regardless of whether or not they are being entreated to raise the minimum wage. So, either way, human workers are out of the picture.

On a global scale

Historically, there has been another devastating argument against even trying for a higher minimum wage in America: We had best not annoy manufacturers with further requests for decent pay, because it will only encourage them to send jobs overseas.

Today, that point is almost moot. So many manufacturing jobs have already been shipped overseas, what else can industry do to us? And if workers in one country decide to demand reasonable pay, business will just pull up stakes and move to another country that is even more deeply sunk in poverty, where workers will be satisfied with even less.

As writer Hamilton Nolan says it:

The global economy is the delightful playground of multinational corporations. They’re able to drastically lower their labor costs by outsourcing work to the world’s poorest and most desperate people. And they’re able to escape paying taxes… The global economy is extremely advantageous to corporations, who owe no loyalty to anyone or anything except their stock price…

Nolan characterizes the concept of a minimum wage as society’s assertion of its moral grounding, a “statement of our belief that the economically powerful should not have a free hand to exploit the powerless.” One answer would be to initiate a worldwide standard, a universal minimum wage that would confound businesses engaged in the race to the bottom.

Of course, getting the whole world to agree on anything is not an easy task. The writer mentions how the rich tend to scoff at proponents of a living wage, and accuse us of being naive dummies who just don’t understand the inherent and immutable rules of capitalism.

He writes:

Not true. We understand them all too well. We understand that, as history has amply demonstrated and continues to demonstrate, absent regulation, economic power imbalances will drive worker wages and working conditions down to outrageous and intolerable levels…

The system that we have — in which the vast bulk of profit flows to corporate shareholders, rather than workers and governments — is not a state of nature. It is a choice.

Nolan makes the point that we no longer tolerate outright slavery where people are paid nothing at all. (Except that we do, with prison labor — but that is a whole separate discussion.) He says:

We would never countenance buying goods produced with slave labor, just because they were cheap… Today we only tolerate economic slavery. Today’s workers are free to quit their jobs at any time, and starve to death.

Reflections from House the Homeless President Richard R. Troxell:

The remaining minimum wage jobs cannot be outsourced. For example: You cannot outsource digging a ditch to China. You must be on site to take tickets at the movie or show theaters. Babysitters must be present to kiss, hold and care for our babies as do childcare workers. Restaurant workers including servers, hostesses, busboys, and pot-shack workers must also be on site.

Construction laborers must be on the job to pick up the scraps of lumber and sweep and bag or barrel the trash. Dry clean workers must be present to take our shirts and skirts, and circle the areas of special cleaning concern. America’s retail workers must be on site to service us and restock the shelves. Farm workers must be on site to pick our cotton, tomatoes, corn, etc.

Receptionists must be on site to attend our front desk phones, to field questions and redirect calls. Nurse’s aides who clean hospital rooms, clean up vomit, empty bed pans, and even give us bed baths must be on site to care for us. Hotel and motel maids clean our rooms, change our sheets, and turn our beds to welcome us here in America. Janitors clean entire buildings including sweeping, mopping and waxing floors in schools all across our homeland.

Fast food workers who work at Bob’s Big Boy restaurant, Wendy’s, What-a-Burger, Kentucky Fried Chicken, Stub’s Bar-B- Q must be present. The Texas Chili Parlor, TGIFs, Marconi Grills, Olive Gardens, a bazillion Chinese restaurants, etc., and of course McDonald’s workers must be present, on sites all across our nation to serve our people. And they deserve to be paid a minimum amount sufficient so that they won’t require a subsidy from you and me, when it is the employer who benefits from their labor.

Also recommended: Writings by Richard R. Troxell

Higher Minimum Wage Won’t Cure Homelessness. This Will.

Open Letter to the Presidential Candidates

Livable Incomes: Real Solutions that Stimulate the Economy: A call to action to create economic stability and growth (Kindle Edition)

Reactions?

Source: “Rise of the Automaton: How Robots Change the Minimum Wage Debate,” undated
Source: “We Need an International Minimum Wage,” Gawker.com, 05/22/13
Image: Internet meme, fair use

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How Clean Does a New Broom Sweep?

homeless-vs-wall-costNobody wants to flush dollars down the toilet. Here is a sentence from “An Open Letter to the Trump Administration”; written by House the Homeless:

Attack Taxpayer Waste: Address the shortcomings of the Supplemental Security Income Stipend, SSI that will result in recipients being able to afford basic rental housing with the disability stipend they already receive.

But in the legislative environs of Washington, D.C., there are many who believe that Social Security, housing assistance, and disability stipends are the taxpayer waste. Similarly, House the Homeless would like to see the minimum wage raised, preferably in the form of the carefully designed Universal Living Wage.

However, a lot of politicians want to see no minimum wage, period.

According to the organizations that keep track of these matters, basic housing has become even less affordable in recent years. All kinds of crazy talk is going around, about messing with Social Security and other safety-net programs. There will be tax cuts, but not for those who need them. Veterans will have to struggle to get their due.

What else will the new administration mean for the half-million Americans who are experiencing homelessness? According to the Los Angeles Homeless Services Authority, 47,000 of them live in the entertainment capitol, which is where ABC’s Antony Funnell learned that:

The homeless of LA don’t fit an easy stereotype — they’re young, old, male, female, black, white, Asian and Hispanic. Some clearly have mental health issues.

Some work during the day and live on the streets at night. Some are shabbily attired, others well dressed.

Not all of them sleep on the streets. Some find accommodation in homeless shelters. But there are too many people for the services available and nowhere near enough beds for everyone.

Anyone who follows the news will have noticed stories originating from many cities, about plans to end homelessness; and a lot fewer stories announcing the end of homelessness in any actual place. LA Mayor Eric Garcetti has a plan to eradicate homelessness.

Last year the city’s minimum wage went up to $15, and voters passed a $1.2 billion bond issue that will pay for the building of 1,000 apartment units per year over a 10-year period. So, that’s a bright spot. But nationally, the big picture does not look promising.

To lead HUD (Housing and Urban Development), the new president chose a multimillionaire doctor who is of course fully on board with the tax-cut concept, and who begrudges the expenditure of federal money on anything except armaments. He is known to be “philosophically opposed” to welfare programs of all kinds, and criticizes anti-discrimination rules as “social engineering,” so this does not bode well. The department employs around 8,300 people to keep the wheels turning and, hopefully, compensate for Ben Carson’s lack of field experience other than having lived in public housing as a child.

Health care and La Migra

On the medical front, the prognosis is quite grim, since the administration plans to dismantle the Affordable Care Act. Substance abuse treatment programs are threatened. As we have seen, a large number of street people have histories of traumatic brain injury.

When less urgent levels of care are denied, hospital emergency rooms bear the brunt of the resulting acute illnesses. It goes without saying, that many unhoused people will suffer and die, and a great many currently housed people will experience homelessness for the first time after they go broke from medical bills.

As if all this were not ominous enough, Caroline Spivack reports that Brooklyn is coping with an increase in the number of people who would rather live on the streets of New York than be deported. They are afraid to go near any shelters, and with ICE agents haunting schools and churches to nab undocumented residents, this is a reasonable fear.

Admittedly, some individuals genuinely need to be taken into custody. New York is a sanctuary city and technically, there are well-defined criteria around whom to punish and eject from the country. Supposedly, “officials will not blow the whistle on non-violent undocumented immigrants who enter the shelter system.” In theory, an innocent person, even if undocumented, would have nothing to fear. But nobody is willing to take a chance, so the alleys and doorways overflow.

Reactions?

Source: “What will Donald Trump mean for America’s half a million homeless people?,” ABC.net, 02/08/17
Source: “Undocumented street homeless rises after Trump’s deportation order,” BrooklynPaper.com, 02/07/17
Image by Really American

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