[Ohio-talk] FW: The Commensurate Wage Fallacy

Tue Apr 16 17:08:47 UTC 2013

Thanks Suzanne for pulling that out and showing it to us. I did not take the
time to read it when the email came in from Anil, and he did an excellent
job of arguing the case.

Thanks again, 
Barbara

-----Original Message-----
From: Ohio-talk [mailto:ohio-talk-bounces at nfbnet.org] On Behalf Of Suzanne
Turner
Sent: Tuesday, April 16, 2013 11:23 AM
To: ohio-talk at nfbnet.org; Delcenia at prodigy.net; Steven Friedman; Joel
Zureick; Alexis Vinick; Sterling Garrett; Janice Hannah-Hardy; Jim Hlavaty;
Carlton Toppin; Nicole Kahn; Krystle Williams; rskill2008 at bellsouth.net;
CRDavisjm at gmail.com; Anthony R. Easley; Brooke Dowdy
Subject: [Ohio-talk] FW: The Commensurate Wage Fallacy

I thought I would share this perspective.
Suzanne

From: "Lewis, Anil" <ALewis at nfb.org<mailto:ALewis at nfb.org>>
Date: April 15, 2013, 1:35:33 PM EDT
Subject: The Commensurate Wage Fallacy

The Commensurate Wage Fallacy
https://nfb.org/blog/vonb-blog/commensurate-wage-fallacy
Submitted by alewis on Mon, 04/15/2013 - 09:36 Blog Date:
Monday, April 15, 2013
By Anil Lewis

Under Section 14(c) of the Fair Labor Standards Act, a flawed formula has
been used for years to calculate the commensurate "piece rate" wage for
workers with disabilities.  This formula, based on average wages and survey
data, works mathematically, but fails the common sense test.  My
twelve-year-old stepson asked me the following question from his math
homework: If Johnny can run one mile in two minutes, how fast can Johnny run
two miles?  He knew that the expected answer was four minutes.  However, he
also had the common sense to know that Johnny would get tired, and it would
take Johnny more time to run each consecutive mile.  I told him to put four
minutes as the answer.  He got an "A" on the homework, but he did not
understand why he got an "A" for the wrong answer.  I validated his common
sense and applauded the fact that at twelve years old, he understood the
root of the commensurate wage fallacy.  The commensurate "subminimum" wage
formula used by over three thousand employers to determine how much they
should pay their workers with disabilities is based on the same flawed logic
as the math problem.

Before we get to the real commensurate wage fallacy, we must discuss how the
prevailing wage is determined.  A subminimum wage employer must conduct an
annual wage survey of private sector jobs in the employer's geographic area
that are similar to the jobs being performed by the workers with
disabilities.  Then the employer takes the average of at least three of
these industry wage rates to determine the hourly prevailing wage for the
job.  For example, if three private sector employees are being paid $8.25,
$8.30, and $8.35 respectively, the average wage rate of $8.30 would be the
prevailing wage used in the commensurate wage formula.

The math is correct, but common sense tells you that the subminimum wage
employer gets to shop around to determine which industry wage rates to use,
so if there is a private sector employee being paid $9.00 for a similar job,
there is no requirement for the employer to use this higher wage in the
calculation.  It is more likely that there are no similar jobs in the
community, in which case the employer should use the federal minimum wage of
$7.25 (or the higher state minimum wage, if one applies) as the prevailing
wage.  Some subminimum wage employers illegally use less than this amount;
and with little to no oversight, this exploitation goes unaddressed for
years.

The most convoluted and manipulative step used to determine the commensurate
wage is for the employer to conduct a time study.  The employer chooses an
experienced nondisabled worker to perform the job for twenty minutes.
Ideally, this is done for at least three cycles by the same person or three
different people.  This provides three productivity rates that are then
averaged to determine the average "piece rate."  Therefore, if thirty-eight
items are produced in the first cycle, forty items are produced in the
second, and forty-two items are produced in the third, the benchmark would
be set for the workers with disabilities to produce forty items in twenty
minutes, or two items per minute.  This means the expectation is for the
workers with disabilities to produce 120 items per hour in order to be paid
the $8.30 prevailing wage.

Again, the math is sound, but common sense tells you that the employer can
conduct many more time studies and choose the results to manipulate the
commensurate wage outcome, ignoring those time studies in which less than
thirty-eight items are produced.  Essentially, the employer can conduct as
many time studies as necessary to justify the wage that the employer would
like to pay for the job.

Common sense also tells you that it is unfair to set a productivity
benchmark for an entire work day using only a twenty-minute time study.
Think of it as another version of my stepson's math problem:  if Johnny can
produce 120 items in an hour, how many can he produce in two hours?  My
twelve-year-old stepson knew the answer.  He realized that Johnny would get
tired, and his productivity would decrease over time.

The commensurate wage professionals state that they take all of this into
consideration by providing a 15 percent time allowance for Personal time,
Fatigue, and Delay (the PF&D factor).  This is calculated to be nine minutes
per hour, which many employers round to ten minutes per hour.  Therefore,
the productivity expectation set for the workers with disabilities under the
earlier scenario would be for them to produce one hundred items per hour in
order to earn $8.30.  This is more commonly stated to be a piece rate, where
the workers with disabilities are paid eighty-three cents for each item they
produce.

Although the PF&D allowance may bring the productivity expectation in line
with the worker's reasonable ability to produce over time, this cannot be
considered an adequate adjustment for personal time, fatigue, and delay
inclusively.  Most subminimum wage employers do not encourage the PF&D
allowance to be used for breaks.  Although most employers are required to
provide nondisabled employees a ten-minute paid rest period for every four
hours worked, the sheltered subminimum wage workshops are excluded from this
requirement.  In fact, the ability to work without a break is presented by
the subminimum wage employer as a benefit to the workers with disabilities,
who are encouraged to work as much as possible in order to earn as much as
possible.  This type of pressure produces stress; the stress results in
mistakes; and mistakes result in defective products that the workers do not
get paid for producing.

Delay is also out of the control of the worker.  The workers cannot produce
anything if the employer is delayed in providing them materials to produce
the item, and unlike the nondisabled workers that get paid an hourly rate,
the workers with disabilities do not get paid when they are not producing
products.  The legal requirement to pay for down time is at the discretion
of the employer, and if an employer does not provide production supplies in
a timely manner, the workers with disabilities can be left idle for much
more than ten minutes without the supplies to produce anything, thus earning
nothing.

The unspoken math is that there are currently over three hundred thousand
people with disabilities being paid wages below the federal minimum.
Specifically, 50 percent of these workers receive less than half the federal
minimum wage, and 25 percent receive less than one dollar per hour, some as
low as three cents per hour.  The common sense truth is that most of these
individuals are already productive enough to earn the federal minimum wage;
they are just victims of the flawed wage formula.  Others could be
productive enough to earn the federal minimum wage if provided the proper
training and support, but will never receive either the training or support
while segregated in a subminimum wage work environment.  Those individuals
being paid less than one dollar per hour are truly not ready for work, but
the subminimum wage employers assert that these workers are being afforded
an opportunity to experience the tangible and intangible benefits of work.
The workers with disabilities get the extremely intangible benefit of
subminimum wages.  The executives get the true tangible benefit from the
public and private dollars meant to support the workers with disabilities,
but used instead to support the six-figure salaries of the executives.  The
subminimum wage employers are essentially getting an "A" for the wrong
answer.

The fallacy here is that the workers with disabilities are supposedly being
paid based on their productivity.  If the employers truly believe that the
commensurate wage model is adequate and fair for workers with disabilities,
why not use the commensurate wage formula to calculate the wages for all of
the sheltered workshop employees, including the executives?  My
twelve-year-old stepson would know the answer to this question as well.

Visit www.nfb.org/fair-wages<http://www.nfb.org/fair-wages> to get more
information, and add your name to our online
petition<https://nfb.org/civicrm/petition/sign?sid=1&reset=1> to help us
stop the perpetuation of the commensurate wage fallacy.

Mr. Anil Lewis, M.P.A.
Director of Advocacy and Policy

"Eliminating Subminimum Wages for People with Disabilities"
http://www.nfb.org/fairwages

NATIONAL FEDERATION OF THE BLIND
200 East Wells Street at Jernigan Place
Baltimore, Maryland   21230

(410) 659-9314 ext. 2374 (Voice)
(410) 685-5653 (FAX)
Email: alewis at nfb.org<mailto:alewis at nfb.org>
Web: www.nfb.org<http://www.nfb.org>
twitter: @anillife

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Suzanne Turner, BSW, MPA
Employment Coordinator and Benefit Specialist

Cleveland Sight Center
216-791-8118 (main)
216-658-7350 (direct)
216-791-1101 (fax)
sturner at ClevelandSightCenter.org <mailto:sturner at ClevelandSightCenter.org>

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