I know this isn't actually an answer to your question, but Microsoft highly recommends not to create a bunch of folders. It lends itself to people creating duplicate files. It also becomes a maintenance nightmare as you are seeing now. The recommendation is instead of creating all those folders - creating different document libraries or create one document library with different content types (that were the folders).

Doing this would allow you to add different permissions to each item.

I agree 100%.  Unfortunately this structure was created long before my time here and has multiple reliant workflows.  It would be very difficult to restructure at this point. 

We actually have a list workflow that creates this folder structure with appropriate subfolders.  I modified that workflow so it sets permissions correctly for future items.  Now the problem is correcting all of the existing items

burkslm​, do you have any official link or document with that Microsoft's statement?

I cannot find the link at this time. However here are some sites they validate what I am saying:

http://sharepointmaven.com/12-reasons-folders-sharepoint-bad-idea/

https://social.msdn.microsoft.com/Forums/sharepoint/en-US/47d8ef9a-32cb-495b-89aa-85bc4c8ccbeb/document-library-best-practice?forum=sharepointcustomizationlegacy

http://www.slideshare.net/gzelfond/document-management-in-sharepoint-without-folders-introduction-to-metadata?next_slideshow=1

https://prezi.com/1l3xswv2oorb/sharepoint-lesson-21-metadata-vs-folders/

http://www.siolon.com/blog/the-folder-less-sharepoint-paradigm/

http://en.share-gate.com/blog/what-is-a-sharepoint-view-and-how-to-use-it

I hope this helps! If I find it, I'll let you know.

Marian Hatala​ can one of these items be marked as correct so we can close this? Please let me know.

Thanks!

burkslm‌, thanks for links provided, I have to go through them.

however, I'm not author of the question so I have no rights to mark it answered. I was just curios about your statement that MS doesn't recommend to use folders.

Oh my bad! Sorry about that!

‌ did anyone of these posts help you solve your problem??

I ended up writing a powershell script to solve my issue

Dallas Nix‌ - 

Glad that you were able to get it working! Are you able to share the PS script? I think it would be a great resource for other users that are looking to accomplish the same thing. If you have the time, write up a quick blog walking users through what you did!

Thanks

Great! Yes like ‌ said please post your power script solution and you can mark that correct.

Thanks!