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‘It’s Feudalism, Pure Exploitation’

The Doe Fund says it pays homeless and formerly incarcerated people New York City’s minimum wage of $15 per hour. But the nonprofit charges weekly fees that can drive their wages below the federal minimum of $7.25.

Photo illustration by Kat Wawrykow. Photo from Getty Images.

Blue-shirted men wielding brooms are a common sight in New York City’s business improvement districts (BIDs) where the city entices real estate development and an influx of new business investment. The workers are some of the city’s most vulnerable people—the formerly incarcerated, homeless or sometimes both—and they are paid and managed by the Doe Fund, a nonprofit at the nexus of welfare and the criminal legal system. But the Doe Fund is not their employer. Instead, the nonprofit’s lowest-paid laborers are legally considered “clients” in a workforce development program, so they don’t have the typical protections that New York City workers enjoy. 

According to contract language reviewed by The Appeal, Doe Fund client pay is not considered a wage, but instead a “training incentive” that recognizes “progress in the program.” The Doe Fund says it pays clients New York City’s minimum wage of $15 an hour, but its workers receive far less. Until this month, the Doe Fund charged a $165 weekly fee to all clients. On July 1, the fee increased to $249 each week. Because it’s a flat fee removed from clients’ weekly paychecks, the fee now drives $15 per hour pay well below $8 an hour—and in some cases, even lower than the federal minimum wage of $7.25. According to the Doe Fund, clients typically work 35 hours each week. A person working 35 hours—30 paid hours, excluding lunch breaks—would earn just $201 after the Doe Fund charges its $249 fee, or $6.70 an hour. 

In a telephone interview with The Appeal, Bill Cunningham, a Doe Fund spokesperson, noted that the wages from the program aren’t taxed. But a New York City worker making minimum wage earns about $12 per hour after tax, significantly higher than the sum earned by Doe Fund clients. 

There’s legal precedent supporting the notion that this “workfare” arrangement violates minimum wage laws. In 1995, 40 homeless plaintiffs sued the Grand Central Partnership claiming that they were paid below minimum wage. That BID was paying people $1 to $1.50 an hour, a small fraction of the city’s $4.25 minimum wage; the Doe Fund is  paying its clients a slightly larger fraction of minimum wage. “We are alarmed to learn of complaints that the Doe Fund is deducting $100 more per month from the pay of homeless workers, possibly resulting in sub-minimum wages,” said Shelly Nortz, deputy executive director for policy with the Coalition for the Homeless (which represented homeless plaintiffs in that class action suit). 

In 1998, U.S. District Judge Sonia Sotomayor—now a justice on the U.S. Supreme Court—ruled that the Grand Central Partnership BID violated minimum wage laws. “Despite the defendants’ intent, they did not structure a training program as that concept is understood in case law and regulatory interpretations but instead structured a program that required the plaintiffs to do work that had a direct economic benefit for the defendants,” Sotomayor wrote. “Therefore, the plaintiffs were employees, not trainees, and should have been paid minimum wages for their work.”

Critics characterize BIDs as “shadow governments” that rake in millions while paying comparatively little for performing services like cleaning city streets. A 2016 article by Crain’s New York found that clearing litter from sidewalks and gutters accounts for just 25 percent of the $130 million spent by BIDS every year. The Doe Fund’s workforce development program, then, supports the efforts of New York City commercial landlords and business owners to avoid paying for comparatively more expensive sanitation workers. Contracts with unionized workers would cost businesses about three times as much. 

“It’s feudalism, pure exploitation,” one Doe Fund program client told The Appeal under the condition of anonymity. “They receive money from the city and private donors, and they take money from us. A thousand dollars a month. Where is it going?”

The answer to that question remains unclear. Cunningham said the fee was increased for several reasons, the foremost being that BIDs haven’t changed their $12 per hour contracts with the Doe Fund to reflect minimum wage laws. He also pointed to unexpected coronavirus-related costs, such as PPE and transporting meals to hotels leased by the city. And he told The Appeal that the fee funds services for clients—housing, food, clothing, vocational training—and repeatedly compared the program fee to the cost of rent for individuals earning minimum wage while insisting that the Doe Fund was more favorable for clients, even when clients earned below the federal minimum wage. 

Earlier this year, New York State Assembly member Andrew Hevesi introduced a bill that would prevent homeless shelters from charging rent to residents, and its provisions may apply to the fee that the Doe Fund charges its clients. “People should not be forced to hand over their hard-earned income from low-wage work cleaning city streets to the operator of their shelter,” Nortz of the Coalition for the Homeless told The Appeal in an email.

Doe Fund executives George and Harriet McDonald each pay themselves about $430,000 per year, and their son, John McDonald, earns a $290,000 yearly salary as executive vice president of real estate. The Doe Fund’s headquarters is the McDonald family brownstone on the Upper East Side, and the nonprofit pays for that, too, at a yearly cost of $200,000 on “rent and utilities.” Blue-shirted Doe Fund clients clean the McDonalds’ street as part of their “beautification” route, powerfully illustrating the family’s use of formerly incarcerated labor for personal benefit

The Doe Fund is also contracted by the New York City Department of Homeless Services to operate shelters across the city, including facilities in Harlem, Bedford-Stuyvesant, and Bushwick. Over 600 people live in the Doe Fund’s shelters and hotel rooms leased by the city, and 410 of those people participate in the nonprofit’s workforce development programming.

The Doe Fund’s shelters don’t just serve homeless people—they also house many formerly incarcerated men. One of the organization’s stated goals is to reduce recidivism and help people successfully re-enter society. About half of the workforce development program’s 410 clients are on parole or community supervision, and roughly 75 percent have had some experience with the criminal legal system. The workforce development program contract specifies that noncompliance with its conditions can result in a parole violation. Former Doe Fund employees say that many of the conditions are racist and paternalistic: Contract language prohibits “visible underwear” and “do-rags,” imposes a 10 p.m. curfew, bans pornography, and requires that clients submit to “random drug and alcohol testing” and fingerprinting. The contract also notes that parole officers will be consulted if shelter residents request a curfew extension to, for example, spend a weekend with a family member off site. 

In the first month of the Doe Fund’s programming, clients clean and maintain the shelter buildings; once “orientation” is complete, clients begin “beautifying” public and private spaces in the city as part of the workforce development phase. Because sanitation work is legally considered part of the workforce development program and not employment, clients have to work in order to remain in the program and receive vocational training. Clients only “graduate” after completing vocational training classes over the course of nine to 12 months. But these courses disappeared during the coronavirus pandemic, which leaves clients in a state of limbo where they’re expected to work indefinitely while earning below minimum wage. Clients have not been provided a date for when the bulk of vocational training will resume. In an email statement, the Doe Fund said it had resumed some educational and vocational courses with a mixture of in-person and remote learning starting July 3—but clients told The Appeal that they hadn’t been in class since early spring. 

Researchers say the Doe Fund should be situated not just in business improvement but in the broader political economy of prisoner re-entry. Reuben Jonathan Miller, assistant professor at the University of Chicago School of Social Service Administration, told The Appeal that the precarity of Doe Fund clients symbolizes a concept he calls “carceral citizenship,” an alternate form of political membership for people who have been accused or convicted of a crime. “Criminality is doing this interesting work of translation,” he said. “You’ve got 40 hours of work, but I’m going to take $250 each week. The criminal label lets you do that. If this happened with anybody else, you might call it exploitative—but because it’s formerly incarcerated people, not so much. Where are you going to go for a new job? Who are you going to complain to?”

Indeed, formerly incarcerated people typically experience much higher unemployment rates than the general population—especially in pandemic era New York City where the unemployment rate is above 20 percent. The Doe Fund’s website proudly notes that clients were deemed “essential workers”—though they don’t have legal status as employees—and deployed to clean streets throughout the darkest stages of the pandemic in the spring. 

Miller also emphasized that re-entry service providers typically focus on individual transformation—“soft skills” such as changing one’s attitude toward work—instead of direct connections to the labor market and permanent housing. He says the Doe Fund’s use of the term “graduate” is both intentional and meaningful. “Graduates are credible messengers,” Miller said. “They are people who have changed their lives. I was blind, now I see. Now I run a program. This is a redemptive story. But ritual and symbolism aren’t enough.”

The Doe Fund’s sanitation services are primarily funded by BIDs, which are part of New York City’s gentrification engine—and policing is deeply connected to gentrification. The city’s first BID was formed in 1984, and the districts function as a sort of public-private extension of city government that have been called “cartels for landlords.” Broadly speaking, BIDs are a symptom of white flight and the reduced tax base that accompanies it; businesses that depended on tax-funded city services (including sanitation) turned to BIDs in order to keep costs low. 

BIDs played a significant role in former Mayor Rudy Giuliani’s “clean up” of Times Square in the mid-1990s, where adult establishments and sex workers were ruthlessly targeted by city officials. In 1998, the city implemented a zoning law that banned a variety of adult businesses from operating within 500 feet of schools, homes, and churches. The Times Square Alliance BID acted as a sort of anti-pornographic custodian in the 2000s, taking steps to push out businesses that attempted to circumvent loopholes in that zoning law. 

Although the Doe Fund contracts with several BIDs, including Dumbo and Downtown Brooklyn, not all BIDs use nonprofit intermediaries to reduce wages and deny legal protections to their workers. For instance, the Downtown Alliance BID employs at least some unionized sanitation workers, as does the 34th Street BID. 

BIDs have close working relationships with the NYPD, and often hire their own security forces to extend “order maintenance” policing more fully. In San Francisco, police used BID surveillance cameras to spy on protests against police violence in real time. So, if police and private security forces can be considered the “front end” of gentrification—ushering “disorderly” people away from sites of real estate and commercial development with tickets and arrests—coercing underpaid formerly incarcerated laborers to “beautify” sites of gentrification might be considered the “back end.” 

The Doe Fund’s influence extends deep into New York politics. The nonprofit is a real estate developer, and the organization maintains more than 1 million square feet of housing in part through financial support from New York State. In addition to receiving tens of millions of dollars in public funds to operate homeless shelters, the organization lobbies the city on homeless services policy (and situates its own services as a better “solution” to homelessness than permanent housing). 

This political work also crops up in the personal politics of Doe Fund management; last year, Politico reported that employees who criticized the Amazon HQ2 deal (or Governor Andrew Cuomo more generally) faced retaliation from George McDonald. The McDonald family has donated at least $250,000 to Cuomo’s election campaigns. The Doe Fund is also tied to New York City’s political leadership: former Mayor Michael Bloomberg has given the organization millions of dollars, and the Doe Fund reciprocated this support by sending “van loads” of program clients to testify in favor of his third term in 2008. 

Connections like these aren’t lost on the Doe Fund’s clients. “George McDonald and Michael Bloomberg are best friends. They were shooting pool in one of the facilities together,” one client told The Appeal. The Doe Fund appears poised to export its welfare-punishment framework nationwide: The organization’s most recent annual report notes that its model is expanding into other cities, including Atlanta, Washington, D.C., Philadelphia, and two cities in Colorado. But it’s possible that cities where George McDonald holds less political sway could resist the expansions.