HOUSTON — Seventy years ago, Goodwill Industries of Houston was founded in order to employ people with disabilities whom nobody else would hire.

That whole time, a portion of those with the most severe disabilities have been paid less than minimum wage, which is allowed under a 1938 federal law enacted on the grounds that even a small paycheck is better than none. About 40 people perform tasks like stuffing bags for giveaways, or re-packaging a retailer’s returns, for a few cents an item.

At the end of July, that program came to an end — not because any laws have changed, but because Goodwill sees where the political winds are blowing.

“There’s a lot of pressure from disability rights organizations locally and nationally to change the law,” says Goodwill of Houston spokeswoman Kym King. “Part of our decision was that this was coming, and we wanted to be proactive about that.”

Only four out of the 15 Goodwills in Texas are still authorized to pay workers less than minimum wage. Many of the organization’s 165 individual outlets have already gotten out of the business. Why? Disability advocates have long argued that allowing workers to be paid less than minimum wage in segregated work environments — known as “sheltered workshops” — is disempowering and unfair.

After years of complaints, the federal government has started to curtail the practice, Democratic presidential nominee Hillary Clinton has come out against it altogether, and some states have passed laws that effectively ban it in favor of services that help people with disabilities find decent-paying work.

None of that has happened yet in Texas, where the latest figures from the Department of Labor show that 10,000 people with disabilities are paid less than minimum wage. But pressure is mounting, as advocates push for the decades-old model to be replaced with something better.

Disability Rights Texas, a federally-designated protection and advocacy group, issued a report last month that lays out the case for scrapping the subminimum wage, sometimes called 14(c) employment after the section of the Fair Labor Standards Act that sanctions it. The organization interviewed 100 clients from 12 out of the state’s 109 organizations authorized to employ people with disabilities for subminimum wages, and found that the system isn’t working for the people it’s supposed to serve.

“People with disabilities are being underpaid to an extreme degree, are not developing any meaningful job skills and are denied the opportunity to find competitive, integrated employment,” the report reads. “Texas has before it both an opportunity, and an obligation, to ensure people with disabilities have access to the same employment opportunities as all other Texas citizens.”

The group did not name the institutions it targeted in its investigation, says supervisory attorney Lucia Ostrom, to protect interviewees against retaliation. But the report said that these nameless employers often do not provide the training that workers are supposed to receive, wages are frequently miscalculated and the state’s vocational rehabilitation system is failing to place them in mainstream positions.

Disability Rights Texas also provided to the Houston Chronicle a list of the 109 organizations that hold 14(c) certificates as of January 2016. Among the largest is North Texas Rehabilitation Services in Garland, which had 321 employees being paid less than minimum wage, assembling products and store displays in a segregated environment. Shelonda Coleman, the non-profit’s CEO, is impatient with those out to abolish her business model.

“If you have the patience to train them to do the job, then go for it,” she says. Coleman agrees with disability rights advocates that it’s possible for all her workers to attain mainstream employment, but she thinks it would take more resources than are currently available to support them. “Okay, come and help us. We want your help,” she says. “We’re not trying to limit anyone. Our goal is to get them ready for the community.”

Goodwill Industries of Houston’s Kym King says she’s also nervous about will happen to those who had worked in the organization’s sheltered program. “It’s really not about the money for them. It’s about the quality of life that comes along with having a job, and the confidence that comes when you are part of the world of work,” she says. “If these individuals were able to be in a competitive work environment, we would have transitioned them already.”

The largest employer of workers with disabilities in Texas, however, is the state itself: North Texas State Hospital, a mental inpatient healthcare facility in Wichita Falls, employs 636 people for less than the minimum wage. The state also supports sheltered workshops by requiring that agencies hire 14(c) employers for contracts that were worth nearly $140 million in 2013, according to a review early last year.

That program, known as “state use,” is currently under scrutiny by the Texas Workforce Commission. In early 2014, a task force convened by a law passed the previous year also recommended that the state ensure all workers paid under state contracts be paid at least minimum wage by September 1, 2016, which would push many more employers out of the sheltered workshop business.

© 2016 the Houston Chronicle
Distributed by Tribune Content Agency, LLC

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