Outdated law allows employees to be paid much less than minimum wage
President Barack Obama’s recent promise to use an executive order to raise the minimum wage for employees of federal contractors was met with two rather different reactions.
From the right, there were howls that Obama is a lawless tyrant. (He’s not.) From the left, there were joyous cries that income inequality is finally being taken seriously. (That remains to be seen.)
If you look at the Fair Labor Standards Act of 1938 under section 14(c), you will find that companies, including federal contractors, can pay people with disabilities less than the minimum wage. The wage can move on a sliding scale based on how productive anemployee with a disability is compared with a worker who doesn’t have a disability.
Contractors that operate with 14(c) certificates run what are called sheltered workshops, some of which pay employees with disabilities as little as pennies on the hour.
A 2012 report by the National Council on Disability included the story of a disabled woman in Ohio who got a job at a sheltered workshop and told family members she would take them out to dinner when she got her first paycheck: “She related how surprised and sad she was when she received that first check — for 38 cents.”
Ari Ne’eman, president of the Autistic Self Advocacy Network, said allowing sub-minimum wage pay for people with disabilities is “a relic from the 1930s.”
“It sort of reflects a 1930s set of assumptions about people with disabilities,” he said. “Unfortunately, you see the sheltered workshop industry really utilize it to exploit disabled people.”
So when the president announced his minimum wage plans in the State of the Union address, the Collaboration to Promote Self-Determination, a network of more than 20 national organizations, including Ne’eman’s, called on Obama to do away with a rule it sees as “fundamentally unjust.”
In a letter, the group wrote that “it is both economically sound and morally just to ensure that people with disabilities have access to the same wage protections as those without” and asked the president to “end the use of sub-minimum wage for employees of federal contractors immediately.”
According to the advocacy groups, administration officials initially said it would require an act of Congress to do away with section 14(c). But a legal analysis by Ne’eman’s group disputed that, saying, “No law requires federal agencies to enter into contracts with employers who pay people with disabilities at sub-minimum wages.”
In a recent radio interview, Labor Secretary Thomas Perez answered a caller’s question about whether Obama would consider adjusting his executive order to address sub-minimum wage pay: “We’re actively looking at what our legal authorities are and what our abilities are.” I contacted the U.S. Department of Labor, but it declined to expand on the secretary’s comment.
Overall, according to the most recent statistics from the Labor Department’s Wage and Hour Division, there are nearly 2,000 certified employers paying more than 216,000 workers a sub-minimum wage.
Some of these workers have intellectual disabilities; others have physical disabilities. Some are veterans who suffered traumatic brain injuries; others are people like Chester Finn, a New York man who is visually impaired and has epilepsy.
In the early 1990s, Finn worked at a sheltered workshop and was paid about $4 for two weeks of work. He’s now a client advocate for New York’s Office for People With Developmental Disabilities, one of the lucky few to move beyond a sheltered workshop.
A 2001 study by the Government Accountability Office found that only 5 percent of sheltered workshop employees go on to integrated jobs in their communities. The vast majority of people with disabilities who are working at sub-minimum wages never have the chance to advance.
“I still have a lot of friends that are at some of these places,” Finn said. “You can’t feel good about yourself. There’s the idea that you’re doing something, but you want your life to mean more than just doing something.”
Allison Wohl, executive director of the Collaboration to Promote Self-Determination, said the whole system is based on a wildly outdated view of people with disabilities.
“When people are given proper support, there is no question that they are able to work in the community like everybody else,” Wohl said. “It’s a segment of the population that is always going to need public support. But that doesn’t mean they should be denied the opportunity to work and live and save just like everyone else.”
An understandable concern for people with disabilities and their families is that raising wages could close off employment opportunities.
But sheltered workshops receive not just the money from federal contracts; they also get Medicaid funds to cover support services for disabled employees. Many are operating with two revenue streams, paying sub-minimum wages and not helping people with disabilities advance. (There are, of course, exceptions.)
Set aside your thoughts on raising the minimum wage in general, and consider this situation, which is one of basic workplace fairness.
This is not the 1930s. And we should not be a country that limits people who want nothing more than a fair shot.