If Money Talks, What Does the Subminimum Wage Say?

National Disability Employment Awareness month (NDEAM) is recognized by the U.S. Department of Labor every October to commemorate the many contributions of people with disabilities to America’s workplaces and economy. This year’s theme is “Access and Equity” so it seems timely to consider one of the major barriers to meaningful employment: the subminimum wage. A provision of the Fair Labor Standards Act (FLSA), Section 14(c), is rooted in mostly good intentions but provides a loophole for workers with disabilities to be paid as little as pennies an hour. For people with disabilities to have equitable access to participation in the labor market, we must eliminate the subminimum wage.

Section 14(c) of the FLSA provides that entities like businesses or nonprofits can apply for certificates with the federal government that allow them to pay disabled workers below the federal minimum wage of $7.25. For disabled workers being paid under 14(c) the average wage is $3.50 an hour.

After World War II, President Roosevelt worked with Labor Secretary Frances Perkins to develop the FLSA, what was at the time revolutionary legislation that established the country’s first federal minimum wage, abolished child labor, and set a ceiling over hours worked. As they drafted the legislation, Perkins suggested creating a subminimum wage for “substandard workers.” The creation of subminimum wage for “substandard workers” was designed to be an incentive for businesses to employ disabled soldiers returning from war. Over time, who was considered a substandard worker has included various identity groups, at points southerners and Black workers were argued to be included, though today in this context it refers to people with disabilities.

Though 14(c) may have been rooted in good intention, there are at least three ethical and evidence-based reasons why this is bad policy. First, it promotes an unfair approach to pay. The subminimum wage is determined based on how well a worker with a disability can perform a task compared to non-disabled workers who are doing the same job in the same area. This is inequitable because the pay for these workers with disabilities is being determined by their “productivity” while this is not the determinant of pay for anyone else in this same way.

Second, it encourages poor quality and segregated employment. The overwhelming number of 14(c) certificate holders are nonprofit community rehabilitation programs, also known as sheltered workshops. These are employment settings where people with disabilities work separately from people without disabilities as they do menial tasks like shred paper, bag screws or sort. They are meant to either teach people job skills before they work in the community or be a landing place for people who are thought to be incapable of community based employment. There is little evidence to support that sheltered workshops actually assist with employment outcomes later on. Instead, subminimum wages are largely paid in segregated settings and do not lead to competitive or integrated employment.

Finally, not only is 14(c) harmful in its implications of the value of disabled workers, it is also an inefficient and burdensome employment model for the government to oversee. There is a proven track record of poor oversight by the Department of Labor’s Wage and Hour division over 14(c) certificates that leads to employers taking advantage of the ability to pay low wages and eventual lawsuits and mandated back-pay. The Wage & Hour division is not equipped to provide the level of oversight needed to ensure the certificates are being used the way they were intended. Instead of funding an outdated program that strips disabled people of their dignity, funding should be directed to models of supported, integrated community employment and programs that promote growth and skill development for disabled workers. As the Wage & Hour division doles out certificates, is supposed to monitor them, fails to and then manages reporting and back-pay of wages, there is a large administrative burden created by attempting to continue the use of an out-dated and harmful program.

The controversy around 14(c) isn’t new. It was scrutinized starting in the 1960s and since then it has been investigated and questioned by policymakers and the disability community alike. While there are those who still believe that subminimum wage is an important and necessary employment option for people with disabilities, there is a movement away from subminimum wage in many states. In recent years, there has been a large decrease in 14(c) certificates awarded in every state, even those that have not taken their own legislative or executive action on the issue. Moreover, there have been attempts at passing federal legislation that would undo 14(c). Most recently in September, the Department of Labor announced they will begin a comprehensive review of Section 14(c) of the FLSA to determine the future viability of the program.

If money talks, the subminimum wage says that people with disabilities are worth less. Eliminating the subminimum wage will not wave a magic wand and make employment accessible for people with disabilities. However, for disabled people to participate in the labor market in an equitable way, it’s a baseline start to give access to good, meaningful and fair-paying jobs.

This post alternates between the use of person-first language and identity-first language when referring to the disability community in an effort to recognize the varied preferences for language and identity within the community.