AbilityOne and Section 14(c): Dinosaurs of Disability Employment Policy

by Kyle Walls

From the Editor: Kyle works for the National Federation of the Blind as our research and regulatory specialist. His duties include everything from crafting responses to federal regulations to acting as a Washington Seminar pack mule. He’s been with the Federation for five years, and he’s learned far more about politics than his humble public school education ever taught him. He’s also learned to enjoy politics and political strategy more than he ever imagined he could. When he’s not feverishly monitoring his email waiting for a new federal rule, he’s usually watching hockey, football, or auto racing. He also likes to read. Here is the fine article he has prepared:

On October 14, 2020, the National Council on Disability (NCD) published a report titled Policies from the Past in a Modern Era: The Unintended Consequences of the AbilityOne Program & Section 14(c). It is not the first report on the impact of sheltered workshops and subminimum wages that has come from a government-sponsored source; it’s not even the first such report in 2020, but it does contain some of the strongest language regarding these programs to come from a federally-funded entity. The report reviews, in great detail, the genesis and evolution of Section 14(c) and the AbilityOne program throughout the twentieth century, the way attitudes regarding disability have changed since the inception of both programs, the negative impacts that both have on disabled workers today, and NCD’s recommendations for the future. The purpose of this article is to give you a brief overview of the report.

Origins & Amendments

It’s difficult to talk about how AbilityOne and Section 14(c) have so thoroughly missed the mark without first discussing how and why they were implemented in the first place. That being said, I’m sure most readers are already at least somewhat familiar with both programs, so I will do my best to keep this section brief.

The AbilityOne program’s first incarnation was as the Wagner-O’Day Act, a part of the New Deal reforms signed into law on June 25, 1938, by President Franklin D. Roosevelt. Coincidentally, the Fair Labor Standards Act containing Section 14(c) was signed into law that same day, but we’ll get to it in a moment. The Wagner-O’Day Act’s specified intention was to increase the employment of blind Americans by creating the Committee on Purchases of Blind-Made Products, which encouraged the Federal Government to purchase items produced by blind workers at nonprofit agencies. In 1971 Congress expanded the program to include goods and services provided by nonprofit agencies that employ people with significant disabilities. This expansion was known as the Javits-Wagner-O’Day Act, or what we who speak policy jargon sometimes call “JWOD,” and it created the Committee for Purchase from People who are Blind or Severely Disabled. In 2011 this committee was renamed the U.S. AbilityOne Commission, but the stated mission of the program effectively remained the same.

As stated above, Section 14(c) was also signed into law on June 25, 1938, but its origins can be traced a few years earlier to the National Industrial Recovery Act, passed in 1933, which included a productivity-based subminimum wage specific to people with disabilities. This law was declared unconstitutional by the US Supreme Court just two years after passage, presumably for something unrelated to subminimum wages for disabled workers because that idea was then rolled into the Fair Labor Standards Act of 1938 as, you guessed it, Section 14(c). The first change to Section 14(c) occurred in 1965 when Oregon Senator Wayne Morse proposed a three-year transition to get all disabled workers up to the federal minimum wage. His act also proposed a minimum wage floor which would guarantee that no disabled worker would be paid less than 50 percent of the prevailing minimum wage. The wage floor was adopted, but the phase out was not. The most recent amendment to Section 14(c) in 1986 eliminated the wage floor and instead called for wages based on an individual’s productivity commensurate to wages paid to workers without disabilities doing the same work in the same area. Sadly, the elimination of the wage floor has resulted in some disabled workers earning just pennies per hour.

Although both laws have been amended numerous times over the last eighty-two years, their initial purpose is still rooted in what has become a severely outdated perception of people with disabilities. As the NCD report states: “Based on the medical and charity models, people with disabilities were not seen as possessing the capacity to work in the regular economy. Special exemptions and programs were deemed necessary—and perhaps the only option for people with disabilities—to participate in a primarily industrial and agricultural economic system.”
Additionally, the report states that “both signal a separate path in society for people with disabilities through a federally sanctioned segregated jobs system.” Fortunately, this model for disability is not one that we still maintain, as we’ll discuss in the next section, which makes the outdated approach of Section 14(c) and the AbilityOne program all the more troubling.

Societal Changes Regarding Disability Policy

The NCD report notes that the civil rights movement of the 1960s and 1970s helped to spark a discussion about how we viewed disability. Rather than the medical and charity models we used before, we now started to think of disability through the social model, which the report defines as moving “away from the view that disability is something to be fixed, cured, or pitied, and promoted the idea that the obstacles affecting persons with disabilities are caused by the lack of integration and universal accessibility within society.”

These updated attitudes were reflected in the laws that passed regarding people with disabilities. In the 1970s Congress passed the Rehabilitation Act of 1973 and the Individuals with Disabilities Education Act (IDEA) in 1975. The NCD report describes portions of IDEA as being “a clear signal of congressional intent that the nation must focus on greater integration of students with disabilities into the educational system.”

Then in 1990, Congress took a massive step forward with regard to disability policy with the bipartisan passage of the Americans with Disabilities Act (ADA). This landmark law instigated “sweeping changes in all facets of life for people with disabilities, and … prohibits discrimination on the basis of disability in the areas of employment, public accommodation, public services, transportation, and telecommunications.” In 2008 Congress strengthened the ADA by passing amendments to the law that reversed unnecessarily restrictive interpretation by federal courts.
Most recently, Congress passed the Workforce Innovation and Opportunity Act (WIOA), again with broad bipartisan support, in 2014. With the passage of this law, the NCD report says, “Congress unequivocally stated that work is an important and valued activity for people and society,” and “established the employment of people with disabilities as a national priority.” The report further notes that one of the most important achievements of WIOA “is the codification of the definition of competitive integrated employment,” which it defines as a job that meets three specific criteria: (1) it pays people with disabilities at least the minimum wage and not less than what is paid to people without disabilities for similar work (a prevailing wage); (2) it is performed at a location where significant interaction with people without disabilities is possible; and (3) it provides workers with disabilities the same opportunity for advancement as their coworkers without disabilities.

The passage of these four laws over the past fifty years illustrates a clear shift away from the policies and ideology embraced by the pre-World War II models of Section 14(c) and AbilityOne. In summary, the report unequivocally states: “Since the passage of the Rehabilitation Act, disability-related statutes and policies have all sought to remedy inaccessibility, inequity, and segregation. On the contrary, Section 14(c) and JWOD now stand out as significant exceptions to the norms of modern disability policy.”

Effects of Section 14(c) and AbilityOne on Workers with Disabilities

So now we’ve reached the crux of the issue: are these laws effective in their stated goal to employ more workers with disabilities? According to the National Council on Disability, the answer is a resounding “no.” But unfortunately, it’s worse than that. Not only is the AbilityOne program not accomplishing this goal, it is also rife with other problems including “a lack of transparency and overlapping and sometimes unclear responsibilities among the various program entities.” As documented in the previous section, the report also states that the AbilityOne Program is “stymied by conflicting goals and an outdated legislative approach that runs counter to modern federal disability policy.”

The NCD found that “while overall AbilityOne Program sales have increased since FY 2011, the employment of people who are blind or have a significant disability … has decreased.” The report also found that in FY 2011, 20.09 percent of the sales revenue was being paid as wages to people with disabilities. However, in FY 2018 that number had decreased to 18.19 percent, a decline of nearly 2 percent. If the money being received isn’t being used to hire more people with disabilities or to increase the wages of people with disabilities, what is it being used for? Additionally, the report found that only about 4 percent of employees in the AbilityOne program exited the program for competitive integrated employment. Only about 3 percent of employees achieve a promotion. The conclusion is that fewer people with disabilities are being trained by the program to work in a competitive job, 96 percent are never leaving the program to actually find competitive integrated employment, and 97 percent are never promoted within the program. Based on these figures alone, the AbilityOne Program is nothing short of a colossal failure.

As if that wasn’t bad enough, the NCD also found that a significant number of work environments were segregated. In the compilation of the report, NCD found many “call centers … where the most direct interaction at the worksite was only between people with disabilities, or supervisors and managers without disabilities.” At another location, employees with disabilities worked in a mailroom in the basement of a hospital, completely separated from other hospital employees and just down the hall from the morgue. The site was deemed integrated because the employees with disabilities sometimes delivered and picked up mail throughout the building. I can’t imagine how it feels to know that your boss thinks you’re only capable of working around dead people.

I would like to tell you that’s it, that the worst of it is over, but sadly, I can’t. Technically, AbilityOne nonprofit agencies with a federal service contract are required to pay a minimum wage of $10.80 per hour even if that agency has a 14(c) certificate (a mandate required by an executive order that went into effect in January 2020). However, these agencies are not required to pay a prevailing wage, so their disabled employees could still be making far less than non-disabled employees performing the same work. Additionally, that $10.80 minimum only applies to disabled employees working on a federal services contract. The agency can still have other disabled employees working unrelated jobs making far less than the federal minimum wage.
Do you remember the three criteria I gave earlier that define a job as competitive integrated employment under the Workforce Innovation and Opportunity Act? Of course you do, but just in case, they were: (1) paying at least the prevailing wage; (2) significant interaction with employees without disabilities, and; (3) similar opportunities for advancement as coworkers without disabilities. Based on that definition, the AbilityOne Program utterly fails each of those conditions, and therefore cannot be considered as competitive integrated employment. This is not a fact that was lost on the National Council on Disability, as they wrote: “The very structure of the program perpetuates the segregation of people with disabilities and further does not provide incentives for the advancement of people with disabilities to supervisory or managerial positions and does not recognize the importance of supporting functions other than direct labor.” And:

“If greater federal purchases from the program do not result in more employment opportunities, … then the nation needs to consider different models for how to improve the employment outlook for people who are blind or have significant disabilities.”

Recommendations of the National Council on Disability

On an October 22, 2020, group phone call to summarize the report, Neil Romano, chairman of the National Council on Disability, stated that he wanted the focus of his tenure to be examining challenges to employment for people with disabilities. In that regard, he learned that NCD had never previously engaged in a comprehensive review of the AbilityOne Program. He then said that this review was “long overdue.” Considering the report’s findings and subsequent recommendations, I think it’s safe to say that we agree with him and should be grateful for the investigative work NCD has done here.

The National Council on Disability does not mince words in its recommendations for the future of AbilityOne. The report states clearly that “to achieve true integration of people with significant disabilities or who are blind, Congress should phase out the AbilityOne Program.” Their suggestion to accomplish this goal is to phase out the program over a span of eight years and replace it “with a new requirement under Section 503 of the Rehabilitation Act that federal contractors hire at competitive wages a percentage of people with significant disabilities or who are blind.” This eight-year phase out would include a study, not to last longer than two years, to determine how to best transition all current AbilityOne employees into competitive integrated employment, and the funding required to offset any potential loss of employment services to workers with disabilities.

The report notes that the stated mission of the AbilityOne Commission is “to enable all people who are blind or have other significant disabilities to achieve their maximum employment potential.” Based on the research conducted for this report, the NCD concludes that the program is “not achieving the desired results.” In the face of overwhelming evidence, it’s hard to argue against that.