On a recent morning, Connie Presnell pulled into the parking lot of Habitat International, a carpet, turf, and contract manufacturing company in Chattanooga. She drove past towering lawn ornaments (one's a metal giraffe), and then parked near the building, where she manages the factory floor. As the company's 30 employees punched in, Presnell received word that Habitat had to ship 13,000 boxes to a Tropicana cannery overnight. She assigned a dozen of her fastest workers to the task and, as the sound system cranked up rock music, they got down to work. As usual, the order was delivered on time.

What makes this story remarkable is that Presnell's A-team was made up entirely of people with cerebral palsy, Down syndrome, schizophrenia, and other disabilities. At Habitat, in fact, nearly every employee (including some managers) has a physical or mental disability or both. And yet, Habitat excels by many measures. Its quality-control statistics are especially enviable. During peak season, from January to June, the factory turns out up to 15,000 rugs a day, five or six days a week. Yet the plant's defect rate is less than one-half of 1%. Only about 10 rugs have been cut incorrectly in the company's history. "We've never had a back order," boasts David Morris, Habitat's owner and CEO. "If we fall behind one day, we'll all work hard to catch up."

Morris credits his workers--who are paid regionally competitive wages for factory work--with the company's impressive financial performance. Profits have risen every year for the past decade, against a steady $14 million in sales. And to think, Morris says, shaking his head, that at first, giving these workers a chance "had to be forced down my throat."

More Disabled, But Fewer Are Employed

It's been 15 years since the first President Bush signed into law the Americans With Disabilities Act, which prohibits discrimination against people with disabilities in all parts of society, including the workplace. Nearly 50 million Americans--a segment of the population larger than the number of either Hispanics or African Americans--are covered by the ADA.

But while the ADA improved the treatment of people with disabilities in many tangible ways--think curb cuts and wheelchair ramps--its legacy with respect to employment has been mixed. In fact, since the ADA went into effect, employment among people with disabilities has declined. Between 1990 and 2004, employment rates dropped by 30% for people with disabilities, according to research conducted by Andrew J. Houtenville, a researcher at Cornell University (see chart). "And this in a time frame when employment rates for other people increased," notes Pamela Loprest, of the Urban Institute.

Economists and policy experts argue over why this is so. Some think specific language in the ADA scares employers, others contend that Social Security's disability insurance program compels people not to work. Whatever the cause, one thing is clear: People with disabilities constitute a growing share of the available work force--their ranks swelling because of medical advancements, the aging population, and importantly, the war in Iraq. More than 15,000 troops are likely to be wounded this year, and the rate of amputation, in part because of the prevalence of roadside bombings, is twice that of any previous war. Meanwhile, Social Security and Medicaid are in the midst of reforms aimed at encouraging employment among people with disabilities, says Houtenville. One proposal would move people into training programs more quickly following an injury. Another would allow people to keep federally funded benefits while they get back on the job, he says. But who will hire these workers?

Managers' Concerns, Real and Imagined

Managers who employ people with disabilities often say that many of the perceived concerns are exaggerated. Hidden costs are rare, for example. Researchers at Rutgers University found that 73% of companies employing people with disabilities spent nothing on accommodations, while those that did spent $500 on average. What's more, federal and state tax credits are available to defray the costs. Fears that disabled workers are injury-prone also seem to be overblown.

Still, managing workers with disabilities does require sensitivity and stamina. At Habitat, workers have had seizures on the factory floor. Every couple of weeks, an employee loses bowel or bladder control. To cope, Morris installed showers in the factory. Employees clock out, clean up, and change into a fresh set of clothes that they keep on hand. Then there are workers who have chronic behavioral issues. "I have one employee who has temper tantrums a couple of times a week," says Presnell. "He hits himself, and jumps up and down and screams."

The outbursts can happen without warning, although they are sometimes triggered when Presnell assigns a new task to the worker, who has autism and doesn't always adapt well to change. At first, Presnell was frightened by these episodes. Now she calmly tells the employee to punch out, then sends him to the break room for 15 minutes. "This is a very bad punishment for him," she says, "because he knows he's not making money."

Forfeiting a Million-Dollar Account

Some employers rely on a middleman--either a sponsoring public agency or a nonprofit group--to take responsibility for their workers. Though many companies stand by this model, Habitat's Morris thinks it's bad to have a buffer. Early on, he worked with a nonprofit whose mission was to offer "clients" as many work experiences as possible. As a result, the nonprofit rotated workers from company to company, which meant a good staffer might disappear the day before a shipment deadline. When Habitat couldn't persuade the agency to change this policy, Morris ended the relationship.

Today Habitat eschews sponsors and applies for no government funds because these programs sometimes cap workers' salaries, which drives Morris crazy. "I hate red tape," he says.

He also hates an inescapable fact of human nature, which is that some people treat people with disabilities poorly. Nine years ago, Morris worked with a group of independent sales representatives to gain distribution to a large West Coast chain. On a visit to Chattanooga, two of the reps made derogatory comments about Habitat's workers.

Though none of his employees heard the comments, Morris was furious. But he couldn't ignore the $1 million the account was worth. The head of the rep firm called to apologize, and that settled matters, but only for a while. Subsequently, some of the reps said still more hurtful things, and so Morris dropped the firm. It took Habitat two years to get revenue back to where it had been before, but it's a tradeoff he's happy that he made.

Just as some people display prejudice, he says, others give Habitat their business specifically because of the company's work force. And while he faces challenges that other business owners do not, Morris prefers them to the challenges he'd face if he ran a typical factory. He doesn't have to worry about turnover or absenteeism. During the winter, his employees often try to sleep at the plant so they can be sure to get in the next day if it snows. "A lot of companies have token ADA employees," Morris says; the difference at Habitat, he explains, is that "we're run by them."

Alison Stein Wellner can be reached at alison@wellner.biz.