Jessica Reynolds wants to make enough money so she can afford her own apartment and stop using food stamps and Social Security benefits to make ends meet.
But that dream is out of reach at her current job. Reynolds works at Shares Inc., a nonprofit that employs people with intellectual and developmental disabilities, where she does small tasks like packing boxes or putting items in plastic bags. Wages are based on how much work is completed, not on hours.
During the last two-week pay period, that work earned Reynolds less than $8.
“I view what I get paid as a slap in the face,” she said.
Shares Inc. is one of 14 nonprofits approved by the U.S. Department of Labor to pay subminimum wages to workers with disabilities in what are known as sheltered workshops. The policy was enacted in 1938 through the Fair Labor Standards Act to provide employment to those who otherwise wouldn’t have a job.
Now, as employment opportunities for individuals with disabilities have vastly expanded in recent decades, Indiana is set to end funding for the federal program in 2027 and redirect dollars to services that help those individuals find jobs in the community.
Reynolds, who is in her mid-40s, said that’s a change she gladly welcomes as an employee at a sheltered workshop.
“I want to do the things I want to do, and that means taking the steps that I’m trying to take to get myself out there and seeing what jobs are available where I can make enough to survive,” she said.
While disability advocates laud the decision, some worry the move could lead to workers losing critical Medicaid benefits and leave those with severe disabilities without a job and sense of purpose.
‘NOT JUST GOOD CHARITY’
In the last decade, 15 states have passed laws ending the use of the subminimum-wage policy known as the 14© certificate. Six other states in 2024 considered legislation stopping the program, including Kentucky, but the bills didn’t pass, according to the Association of People Supporting Employment First.
In Indiana, state administrators for several years have been edging toward ending sheltered workshops by providing grants to transition to programs that help those with disabilities find private-sector jobs.
The tactic has worked. The number of entities using 14© certificates has dropped from 36 in 2022 to just 16, according to Michele Holtkamp, public affairs director at the Indiana Family and Social Services Administration.
The new approach comes after lawmakers in 2017 approved the Indiana Employment First Act, which mandates that all state agencies work first to ensure that their programs and funding support individuals to find community-based employment.
Kim Dodson, CEO of the disability nonprofit The Arc of Indiana, said the subminimum-wage policy today is outdated as more people with disabilities feel empowered to work at real jobs earning real wages. At the same time, businesses over the past few decades have also become more open to employing them.
“Hiring people with disabilities is actually good business, not just good charity, because they are really good employees,” she said.
The number of workers nationally in sheltered programs dropped from 128,000 in 2018 to 38,500 in August 2024, according to the employment-first association. Today, fewer than 1,000 Hoosiers work in a sheltered workshop, FSSA’s Holtkamp noted.
Expanded training and work opportunities coupled with pushback against subminimum wages led the Department of Labor in December to propose altogether ending the nearly 90-year-old program. The agency is currently accepting public comment on the proposal that would implement a three-year phaseout of the 14© certificate.
“One of the guiding principles of the American workplace is that a hard day’s work deserves a fair day’s pay, and this proposal ensures that principle includes workers with disabilities,” said Jessica Looman, the department’s wage and hour administrator, in a release.
A JOB WITHOUT BENEFITS
But for some disabled Hoosiers on Medicaid, looking for a job comes with a serious hangup. In Indiana, those who earn more than 350% of the federal poverty level of about $15,000 for a single person lose their federal health insurance.
That’s what happened to Erin McGuire after she left a sheltered workshop for a job with FedEx. The 52-year-old initially gave up her Medicaid benefits voluntarily. When she decided to reapply, she learned that between her wages and social security survivor benefits, she no longer qualified.
“It was pretty devastating,” she said. “Medicaid is what I really needed to help with hospitals and dental and everything.”
The fear of losing Medicaid is keeping some people earning subminimum wages from seeking a good-paying job outside a workshop setting, noted McGuire, who has since found another insurance plan to make ends meet.
That worry is something Indiana Rep. Ed Clere, R-New Albany, hopes to end. Last week, he submitted legislation that would do away with income limits for those who want to work and keep their Medicaid benefits.
“This is an important part of the new ecosystem we’re trying to create as we move away from 14© workshops,” said Clere, who chairs the House Ways and Means subcommittee on health and Medicaid.
Lawmakers have unsuccessfully proposed similar legislation in the past, he noted, but the pending workshop phaseout could boost the bill’s chance of passing this session.
Clere also authored legislation in 2023 creating a pilot program to train those with disabilities for jobs in manufacturing. He argued sheltered workshops should now transition into training facilities and partner with colleges like Ivy Tech to create pathways to community employment.
“That transition needs to happen because there’s no justification for subminimum wages,” he said.
NOWHERE TO GO
The workshop phaseout also needs to consider those workers whose age or disability prohibits them from working a private-sector job, argued Dodson with The Arc. For those Hoosiers, a sheltered workshop is the only work option, and ending it without proper planning could have negative impacts.
“We don’t want people to just go home and do nothing and sit in front of the TV,” she said. “That’s not a win for anyone whatsoever.”
Reynolds, who currently works in a sheltered workshop, echoed that sentiment, noting some of her co-workers will have nowhere to go when the program ends.
“I’m all for closing the workshops, but you need to think how this going to affect these individuals,” she said. “Some of the employees that I work with need structure, and if they don’t have that, they’re not going to know what to do with themselves.”
Options to consider could include enrolling clients in day programs to teach skills they might be interested in, or providing volunteer opportunities, Dodson noted.
Clere supports keeping sheltered workshops around for those whose disabilities bar them from holding a private-sector job. But those workers should be paid at least minimum wage, the state representative said.
Some Indiana businesses are already doing that. The Bloomington-nonprofit Stone Belt closed its workshop, but administrators renegotiated a contract with a medical company to pay minimum wage to clients, Dodson explained.
“Nonprofit agencies are finding ways to do the phaseout while continuing to provide those work opportunities for people with disabilities,” she said.
More than anything, legislators need to talk to those with disabilities to hear their needs and concerns as the state moves to shutter the subminimum-wage program, argued McGuire, the former workshop employee who lost her Medicaid benefits.
“We need to be there with the legislators and tell our stories, because they pass these bills when we aren’t there,” she said. “This should be about us, and they should be passing these bills with our input.”