Subminimum Wage

Most people work for a living. We usually recognize that employers hire workers because it increases profits overall. But when it comes to disabled workers, suddenly we act as if the employers are doing favors or charity by having such workers. They aren’t hiring workers, they’re “providing employment opportunities.” These beliefs in the benevolence of employers leave workers vulnerable to mistreatment and paltry wages. The Fair Labor Standards Act of 1938, which gave Americans the 40 hour work week, specifically allows for overt wage discrimination against disabled workers. Employers who receive a special certificate from the Department of Labor may pay disabled workers well below the federal minimum wage, so low in fact that there is no mandated standard at all.

Color photograph of a pile of pennies

Most of the workers receiving these subminimum wages are in sheltered workshops, essentially sweat shops for disabled Americans right here at home. They work doing repetitive, menial tasks that don’t provide the social skills or job training the “employment opportunities” are supposed to. According to Department of Labor records, more than two thousand employers pay subminimum wages to over 400,000 disabled workers. One of the best known and largest of these employers is Goodwill Industries, which allows its affiliates to decide whether or not to pay subminimum wages. A majority of affiliates choose to do so. As Watchdog.org reported earlier this year:

Goodwill Industries of Eastern North Carolina Inc. President and CEO DennisMcLain received $430,239 in total compensation, while his wife, Linda, received another $365,133 in pay and benefits. The group’s 2011 tax return notes that the couple was also entitled to first-class travel and access to a private club, paid for, in part, with revenue generated from the efforts of disabled workers who were paid less than minimum wage under the special wage certificate program.

There are two primary justifications for the continuation of sheltered workshops and subminimum wage for disabled workers. The first justification is that disabled workers are necessarily less productive and worth less to an employer. However, numerous studies have shown that disabled workers with proper workplace accommodations can be as productive as abled peers. It’s important to recognize that the vast majority of workers receiving subminimum wage in a sheltered environment never move on to fair compensation the general jobs market. Their existing skills are not taken into account when they are assigned to menial labor such as packaging or labeling, and the work does not provide them with new skills for general employment.

The second justification for paying some people pennies an hour is that Social Security programs place a limit on personal or marital earnings that can reduce benefit payments. Therefore, the argument goes, it is best to pay disabled SSD recipients so little that their benefits will not be impacted. However, this is an argument for reforming Social Security so that it does not require disabled benefits recipients to be impoverished, not an argument for paying people wages that keep them impoverished.

The good news is that things are changing. In May of this year, New Hampshire became the first state to ban subminimum wages. Governor Maggie Hassan said of the bill, “New Hampshire has a strong tradition of treating all of our citizens with respect and dignity, and by making New Hampshire the first state to prohibit employers from paying subminimum wages to people who experience disabilities, Senate Bill 47 helps build on that tradition.” On the federal level, the Secretary of Education has proposed changes to Vocational Rehabilitation laws, including limitations on subminimum wages. The fight isn’t over, but disability advocates have made tangible gains in employment rights for disabled workers.