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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