A House bill, the Transformation to Competitive Integrated Employment Act, aims to eliminate the federal “subminimum wage”—the ability for employers to pay workers with significant disabilities below today’s hourly federal wage floor of $7.25 per hour.
Current law allows employers to apply for a federal certificate from the Department of Labor (DoL) to hire subminimum wage workers. A worker having a disability is not sufficient to obtain one. The employer must actually go through a quite bureaucratic process of providing proof that the specific disability significantly impairs a worker’s on-the-job productivity and by how much. Employers must conduct a “prevailing wage survey” to ascertain the wage of someone able-bodied doing the same type, quality, and quantity of work in the local labor market as well, such that a productivity-adjusted subminimum wage can be determined for the worker.
Estimates differ for how many employers bother to go through this difficult process, which requires the productivity of hourly paid workers to be reevaluated every six months and a new prevailing wage survey every year. But one DoL study estimates this exemption still covers as many as 321,131 workers. This includes “sheltered workshops,” which often employ people with intellectual and developmental disabilities to undertake tasks such as “bagging newspapers, shredding papers by hand or wrapping silverware in napkins.” A change in the law, then, would affect a significant number of people and some of the country’s most vulnerable.
Advocates for subminimum abolition claim that the current exemption from the federal minimum wage allows these disabled workers to be exploited doing menial jobs, often under the guise of vocational training. A slew of state and city level legislation in recent years has sought to abolish more local equivalents, coinciding with aggressive minimum wage hikes. This House bill would likewise raise the subminimum disability wage to the federal minimum for all workers, while Democrats lobby for a $15 federal minimum wage in Congress.
Eliminating subminimums, though, would clearly risk harming many disabled people’s personal prospects of finding employment. Work can bring immense meaning, camaraderie, and fulfillment beyond remuneration for individuals whose lives are difficult because of their conditions. Families of disabled workers have talked of the importance of an established environment where the worker feels “safe, loved and accepted, while having the pride of a paying job,” with pay levels often a secondary concern. Learning opportunities at subminimum wage jobs may also allow disabled workers to gain skills that lead to better opportunities down the road.
The sad reality though is that disabilities can impair workers’ abilities to undertake particular tasks productively, raise the time and money costs of training or supervising them, and require additional supplementary costs for transportation or adapted workstations to support them. While it’s plausible that some employers might abuse the subminimum exemption, it seems far more likely that the primary impact of raising the cost of hiring these disabled workers will be to reduce work opportunities for them.
Economic theory tells us that any disemployment effects of minimum wage laws will be greater the larger the gap between the wage rate and the value of a worker’s productive activity. The bulk of the academic literature still finds overall negative effects on employment from raising wage floors across the population. But this impact is likely to be most pronounced for the least productive workers and when wage floors are raised to very high levels—the exact conditions that disabled workers would risk facing in future were the subminimum wage abolished today.
Furthermore, even the disabled workers able to keep their jobs wouldn’t be immune to the policy’s negative effects. Recent research from Professor Jeffrey Clemens of UC San Diego has shown employers react in a multitude of ways to increased hourly wage costs—some might cut the average hours of their workers in order to avoid eligibility for other benefits. Others may decide to further reduce learning opportunities or the provision of costly training, trapping some disabled workers, who could do more in time, into roles that lack upward mobility.
The U.S. is not unique in having a policy framework that recognizes the risks of blanket minimum wage laws for disabled people. New Zealand has a similar system to the U.S., while in Australia the disabled minimum wage is dependent on “assessed work capacity.” In Germany, disabled workers can find vocational and sometimes transitional training in workshops for between 1 euro and 1.25 euros per hour. True, some countries, such as the UK, have no such exemptions. But just a few years ago, one of Britain’s welfare ministers got into a political storm by acknowledging at a conference how the minimum wage there harmed the job chances of many disabled workers.
In today’s fraught political climate, of course, proponents of abolishing the subminimum wage like to take the moral high ground, implying that those who oppose the move are somehow “anti-disabled.” But early 20th century minimum wage proponents saw the weakening of employment opportunities for immigrant and disabled workers as a feature of high minimum wages, not a bug. Infused with their interest in eugenics, early “progressive” thinkers argued that stripping the “unemployable” of jobs was “not a mark of social disease, but actually of social health.” In language that would shock today, Fabian Society founder Sidney Webb said in 1912, “Of all ways of dealing with these unfortunate parasites, the most ruinous to the community is to allow them unrestrainedly to compete as wage earners.”
Campaigners today are better intentioned in respect of the needs of disabled people. But in truth, even their own advocacy acknowledges the risks abolishing the subminimum wage would bring. The House Bill would deliver additional financial support to help employers’ and states’ transitions to work more “integrated” into the community—an indication that, without it, opportunity would be diminished as current workshops and employers struggle to justify continued employment.
The program would supply grants of up to $10 million per applying state, which would then be used to incentivize employers to do away with the certificate program and close workshops. In turn, states that apply must provide “assurance” that all disabled workers hired under the certificate system would continue to be hired under the new bill. How states intend to provide such assurances remains elusive. If eliminating the subminimum wage wouldn’t harm the employment prospects of disabled workers, then why are these grants even necessary?
This highlights the danger. Inherent in the campaign to abolish the subminimums is a recognition of the risks, but that is outweighed by a deep paternalism that government knows better than families what is best for all disabled people. “We have chosen a workshop…with our son’s best interests at heart,” said Linda Hau, the mother of one disabled worker in an interview with NPR. “Any suggestion that we would allow him to be taken advantage of or discriminated against is an insult.” A higher wage floor, even with transitional support, would still deter the hiring of disabled people in the longer term, while undermining the viability of specific roles today that cater better to the specific needs of certain families like Linda’s.
Policymakers should trust families to know the individual needs and preferences of their loved, disabled family members. And they should avoid removing opportunities from those already dealt a very difficult hand in life by raising the costs of employing them.