Braille Monitor                                                                                May-June 1986


NFB Testifies on Workshops

(The following testimony was presented before the Committee on Small Business of the United States Senate March 26, 1986.)

Mr. Chairman, my name is James Gashel. I am Director of Governmental Affairs for the National Federation of the Blind. I am appearing in this hearing on behalf of the Federation. My address is 1800 Johnson Street, Baltimore, Maryland 21230; telephone (301) 659-9314. I greatly appreciate the opportunity you have extended to me to participate in this hearing and to provide our views relative to small business set aside contracts for not-for-profit organizations operated "in the interest of" handicapped and blind individuals, commonly known as sheltered workshops.

Almost 20% of working age blind Americans who are employed work in sheltered workshops. The National Federation of the Blind provides them an opportunity to speak with a collective voice. Our members, more than 50,000 strong, are organized into state affiliates and local chapters in each state and most sizeable population areas. Our leaders, and the vast majority of our members, are blind. So when we talk about blindness, and the programs that serve or employ blind people, we speak from personal experience. We know which programs work, and we know where repairs are needed.

Seventy percent of the employable blind people in this country are either unemployed or substantially underemployed. So, if we are going to get anything out of legislation such as S. 2147, your bill before this Committee, our aim is to reduce the outrageously high rate of unemployed or underemployed working age blind people. Sheltered workshops as they exist today are not helping, but they could be improved. My presentation in this hearing will provide you with information to help you do that.

The ultimate purpose of S. 2147 is to provide blind and handicapped people with more and better work opportunities. That is an objective we share. But the bill in its present form will not achieve our goal, Mr. Chairman. Absent are certain features designed to insure employment opportunities for the blind and handicapped, to protect wages for the blind and handicapped workers, to guarantee rights of collective bargaining and observance of other normal labor standards, and to improve placement of blind and handicapped individuals in competitive employment outside of sheltered workshops, we cannot support this measure. What could we support?

The National Federation of the Blind strongly favors any legislation that will promote better work opportunities and fair employment practices for blind and handicapped individuals in sheltered workshops, as well as in competitive employment. I imagine you share this goal, too, Mr. Chairman. If so, we would like to have your assistance in making needed changes in S. 2147 when the Committee considers this bill for mark up and reporting to the Senate.

A Workshop Profile

A description of a typical sheltered workshop might help to set a framework for the recommended changes we intend to offer for S. 2147. Our specimen workshop is the Industries Program for the Blind and Handicapped operated by the State of Connecticut, Board of Education and Services for the Blind. The workshop has plant locations in Newington and Wethersfield. Both will soon merge into a single facility located in West Hartford. The figures I will cite concerning employment and pay come from 1983 and represent the pattern of this program's operation in the years before and since.

If you include all positions from direct labor to top management in the Connecticut workshop, there is a total workforce of 116 individuals. Eighty five perform direct labor jobs, and 31 hold positions classified as management, supervision, and indirect labor. Of the 85 direct labor workers, only 6 are sighted with no reported handicaps. Eight sighted workers have handicaps, and the remaining 71 direct labor employees are blind, some with other handicaps. As for the 31 employees classified as management, supervision, or indirect labor, 20 of them are sighted without reported handicaps. Six more are sighted with handicaps, and 5 are blind--3 with other handicaps and 2 without.

Ninety-three percent of the employees in direct labor positions are individuals reported to be blind or handicapped. But in the management, supervision, and indirect labor category, blind and handicapped people represent only 35% of the work force. These, of course, are the better paying jobs. The figures bear that out. Total direct labor pay amounts to $151,424., divided up among 85 employees (93% of whom are blind or handicapped). By contrast, pay to managers, supervisors, and indirect labor workers amounts to $2 93,597., divided up among 31 employees (only 35% of whom are blind or handicapped).

As for hourly pay averages, all blind and handicapped direct labor workers combined earn an average of $2.04 per hour, whereas all sighted handicapped or nonhandicapped direct labor workers earn an average of $4.09 per hour. Sighted workers without handicaps earn $4.20 per hour. As for managers and supervisors, sighted people without handicaps (who are in the majority in this category, holding 20 out of 31 positions) earn an average of $8.25 per hour, in comparison to their blind and handicapped coworkers, who earn an average of $5.54 per hour.

Now for the bottom line: total pay to all 116 employees at the Connecticut workshop is $445,021. There are 26 sighted employees who do not have handicaps, representing 22.41% of the work force. Yet these 26 individuals were paid $283,911, or 63.79% of the total pay for the Connecticut workshop. That leaves $161,110. to be paid to blind or handicapped workers, or a little over 36% of the total pay. But the blind and handicapped (who according to these figures received a little over 36% of the pay) represent almost 78% of the work force. That's what the figures show, Pay levels in the Connecticut workshop seem to depend strictly upon the extent of a person's handicap or blindness. The best jobs and the best pay go to sighted individuals who do not have handicaps. By contrast, workers who are blind only or blind with handicaps hold the lowest level jobs and receive the lowest pay.

I emphasize that the Connecticut workshop is absolutely typical of the nonprofit industries that now seek admission to section 15(c) of the Small Business Act. I would challenge any of these workshops to show you a work force that has blind and handicapped people significantly involved in management and supervision. And more to the point, I would challenge any of these workshops to show you that the percentage of pay for workers who are blind or handicapped even approximates the percentage of the work force represented by employees who are blind or handicapped. In other words, in a workshop where 78% of all employees are blind or handicapped, they ought to be receiving 70%, 75%, or even 80% of the pay. That is the fair distribution I am talking about. But, Mr. Chairman, you won't find that kind of equitable pay distribution in the workshops. We find that to be an unacceptable condition.

Existing Law

The profile of the Connecticut workshop just presented shows that work opportunities for the blind and handicapped are principally found in the direct labor positions, whereas employment for the sighted and nonhandicapped is in management and supervisory positions. Also, pay for the blind and handicapped averages well below the Federal minimum wage, whereas pay for sighted workers (even those in direct labor) is substantially above the Federal minimum. These conditions arise from two existing Federal laws--the Javits-Wagner-O'Day Act, and the Fair Labor Standards Act--both originally enacted in 1938.

Under the Javits-Wagner-O'Day Act, sheltered workshops are able to qualify for noncompetitive government contracts if 75% of the direct labor in the workshop is performed by blind or other severely handicapped individuals. There are absolutely no requirements for blind or other severely handicapped people to be working in management or supervisory positions. Similarly, there are no requirements pertaining to pay distribution, such as a minimum percentage of pay for the blind or handicapped, or some other concept to assure that these employees are fairly benefiting from the workshop's operation. The assumption of the Javits-Wagner-O'Day Act is merely that providing the Federal business will result in jobs for the blind and handicapped, and the jobs are supposed to be direct labor.

As for pay, the requirements which apply to sheltered workshops are mainly found in section 14(c) of the Fair Labor Standards Act. This section provides several types of exemptions from the minimum wage, all of which are applicable to handicapped workers in sheltered workshops. The exemptions granted by the Secretary of Labor under section 14(c) permit wages for blind and handicapped individuals to be as low as 25% of the Federal minimum wage. Further exemptions which apply to units known as "work activities centers" allow wages even below 25% of the Federal minimum. Industries classified as "regular workshops" are required to pay the blind and handicapped workers at least 50% of the minimum wage, but exemptions for individual workers below the 50% subminimum will be granted if the proper forms are filed with the Department of Labor.

The provisions of existing law just described show that workshops already enjoy a special status in obtaining noncompetitive Federal contracts and in operating under labor standards that are less stringent than the requirements which apply to their counterparts in competitive small business. The question which Congress should now examine in the present consideration of extending small business set aside contracts to workshops is whether under existing laws the blind and handicapped workers are actually getting a fair shake. Are these not-for-profit organizations actually operated "in the interest of" handicapped individuals? The evidence shows that they are not.

Collective Bargaining

Are sheltered workshops subject to the jurisdiction of the National Labor Relations Act? That is a subject which has been hotly debated. Without the collective bargaining rights which their counterparts in competitive small business have, the blind and handicapped workers in workshops have no mechanism to negotiate pay equity, layoff protections and recall guarantees, improved working conditions, fringe benefit plans, or any other issue of labor/ management relations that may arise. So employees in these workshops are largely at the mercy of the managers, and their only hope is that the managers will be motivated by a benevolent spirit.

In recent years, both the National Labor Relations Board and the Federal courts have been asked to rule on various union representation requests presented by workers in sheltered workshops. More and more the tendency of the Board has been to assert jurisdiction, finding that the workshops are primarily conducting business activity in the generally accepted sense. In an unbroken string of four cases involving workshops for the blind over the past ten years, the National Labor Relations Board has asserted jurisdiction, and the appeals courts in two Federal circuits have concurred that collective bargaining in the workshops is a proper form of labor protection for these workers.

In opposition to these rulings, the workshops have claimed an exemption from the National Labor Relations Act. They have argued that Congress has consciously given them a preferred status by enacting the Javits-Wagner-O'Day Act and the Fair Labor Standards Act, both of which (according to the workshops) give deference to the management of the work shops in determining how their blind and handicapped workers will be treated. Believe it or not, the workshops actually contend that the blind and handicapped people who perform direct labor are not even employees. But that sophistry is not fooling the National Labor Relations Board nor the Federal courts.

A principle fact that shines through the smoke screen of talk about rehabilitation and therapy for the handicapped is the productive output of the blind and handicapped workers in the workshops. Under the Javits-Wagner-O'Day Act alone last year 15,000 of these direct labor workers produced nearly $300 million in sales to the Federal government for their sheltered workshop employers. Yet these workers only received pay amounting to about $41 million, or 13.66% of the gross sales. Need I say that the industry standard for labor pay as compared to gross sales far exceeds the 13.66% paid last year to the blind and handicapped workers holding labor jobs in the Javits-Wagner O'Day program? I doubt that any labor union in this country would settle for such a paltry return for its members.

Recommendations for S. 2147

If Federal small business set aside contracts are extended to sheltered workshops, Congress should require the workshops to provide better work opportunities and fair employment practices for the blind and handicapped employees.

(1) An employment standard should be established which is not limited to direct labor jobs. In this respect, S. 2147 currently follows the limited standard of the Javits-Wagner-O'Day Act, requiring that at least 75% of the direct labor be performed by blind or handicapped people. We are suggesting that a standard be established for the entire work force, not just the direct labor jobs. Seventy-five percent of all work hours to be performed by the blind or handicapped would be an acceptable standard in our opinion. But the issue is not the precise percentage. Whatever the percentage, the Small Business Act should not perpetuate an employment standard for the blind and handicapped which has proven to be a severe limitation on employment opportunities in jobs other than direct labor in the workshops.

(2) A pay standard for blind and handicapped workers should be established to achieve job equity and fair distribution of compensation. S. 2147 has no pay standard currently. The pay standard should require that all workers receiving compensation under contracts awarded pursuant to section 15(c) of the Small Business Act shall be paid at least the Federal minimum wage. Beyond that, an overall pay standard should be included to assure that at a minimum there will be an approximate balance between the percentage of pay for blind and handicapped workers as compared to the percentage of their numbers in the work force. In other words, if blind and handicapped individuals represent 70% of the entire work force, then the standard for that workshop would be that the blind and handicapped receive an approximate 70% pay distribution.

(3) All labor management and labor standards requirements otherwise applicable to similar small businesses should apply to workshops seeking contracts under section 15(c) of the Small Business Act. The Small Business Act should not perpetuate substandard labor conditions for blind and handicapped workers. Just as small business owners are required to bargain with their employees (if the employees elect to bargain and the business is big enough) so, too, the managers of sheltered workshops should bargain with their blind and handicapped employees, if the employees want a union. So, jurisdiction of the National Labor Relations Act and all other labor standards that otherwise apply to small businesses should apply to sheltered workshops that participate in the section 15(c) program, but only to the extent that such requirements apply to all other businesses. We are not seeking an expansion, just equity.

(4) Workshops that participate in section 15(c) of the Small Business Act should show, in advance of the receipt of any contract, that a working agreement has been established with agencies and industries in the community under which blind and handicapped individuals will be employed to fill existing and future job vacancies outside of the sheltered workshop. Then, actual job placement performance in accordance with such agreements should be evaluated as a principle factor in connection with the award of future Federal contracts under section 15(c). This recommendation would properly assist the workshops in fulfilling their role as transitional employment settings designed to prepare individuals to compete in the non-sheltered work force.

Mr. Chairman, as I have stated in several ways before, these four recommendations have the combined purpose of providing better employment opportunities and fair employment practices for blind and handicapped individuals who work in sheltered workshops. I must emphasize, however, that these proposals are specifically tailored to the objective of permitting workshops to qualify for small business set aside contracts under section 15(c). The standards for eligibility of the workshops, which we are proposing in these recommendations, are clearly proper requirements within the scope of section 15(c). We are not asking you to change the definition of a sheltered workshop under other laws or to strike down any of the existing special or preferred requirements that workshops hold claim the purview of the Small Business Act (and only for purposes of participating in the small business set aside program) workshops should be required to meet certain qualifying standards aimed at better work opportunities and fair employment practices for their blind and handicapped employees.

The authorization for workshops to have small business set aside contracts should at least obtain that goal. If it does, S. 2147 will truly be a beneficial addition to the growing body of Federal law designed to provide more employment opportunities and equal rights for blind and handicapped people. Reports by Congressional committees (both in the House of Representatives and in the Senate) confirm what I have said about limited employment opportunities and low pay for blind and handicapped workers under present conditions as permitted by existing Federal laws. Similar findings have been made by the General Accounting Office, the Department of Labor, and even private research teams who have surveyed workshops pursuant to Congressionally ordered studies. In concluding this statement I would urge you to review these findings and thereby ensure that the legislation you develop and refine in this Committee will be properly written to achieve better employment opportunities and fair employment practices for the blind and handicapped in jobs provided pursuant to section 15(c) of the Small Business Act. Above all, the legislation you approve and report to the Senate should not perpetuate the limits and inequities of other programs. I thank you.