It's Legal to Underpay Disabled Workers

America, the land of opportunity, has undoubtedly exploited millions of citizens—from minorities to low-income citizens—in its journey to becoming one of the wealthiest countries in the world. While racial minorities and women are often discussed when the subject of marginalized groups comes up, one group that is often systematically abused and overlooked is the disabled. So, with October being Disability Employment Awareness month, it is about time that the U.S. reexamines how citizens born without able-bodied privilege are treated in its society.

Staggering unemployment rates significantly affect the disabled more than other minorities, and the disabled employment-population ratio is only a mere 19.8 percent in 2018 compared to the 65.9 percent ratio among those without a disability. According to the U.S. Bureau of Labor, “. . . [Across] all age groups, people with a disability were much less likely to be employed than those with no disability.” 

The few that are hired face another problem: subminimum wages.

According to a 2019 Forbes report, out of the 420,000 disabled people employed, the vast majority of them receive only a meager average of $2.15 per hour as payment for their labor, and this is an obviously low number, especially when considering that the U.S. national minimum wage is $7.25 per hour. In many cases, individuals with disabilities were even paid as little as 4 cents per hour.

While this transaction is morally wrong, it is unfortunately legal due to a loophole in the 1938 Fair Labors Standards Act, which allowed employers to administer payments based on productivity or ability—even payments under the federal minimum wage. The idea was initially introduced in the legislative hearings that followed President Franklin Delano Roosevelt’s suggestion to implement a national minimum wage, during which Labor Secretary Frances Perkins advocated for reduced wages for “substandard workers,” meaning “persons who by reason of illness or age or something else are not up to normal production.” 

While seemingly well-intended at first, as the years continued over time, the interpretation of “substandard” became blurred, and many employers have actually attempted to weaponize this loophole in some of the most horrid ways imaginable. For example, employers would commonly argue that because Southern workers supposedly “tended to be slower of movement and less oriented toward production,” they should therefore be paid as substandard workers. This loophole would even be utilized in racist ways, with many seeing this as an opportunity to discriminate against black workers, justifying their decisions by claiming that black employees are “inherently” substandard workers.

Thankfully, these arguments were considered controversial—even for their time period—in the end, and while future progressive actions remedied the racist and/or overall worker abusive practices, disabled people, however, are still one of the few groups to be given subminimum wages today. 

Today, employers who exploit this loophole tend to claim that they’re providing these workers with “vocational training and jobs for those who [would] otherwise never find one.”

These jobs referenced are often a part of “community rehabilitation programs,” otherwise known as “sheltered workshops.” A mix of both nonprofits and private firms, these programs usually utilize disabled labor due to their structures, therefore making them a high subject of interest when subminimum wages are discussed. And while sheltered workshops often claim to purpose themselves around disabled individuals’ best interests, too frequently have many gone against this statement.

Rock River Valley Self Help Enterprises is perhaps one of the most horrific and well-known examples to illustrate this. While Self Help Enterprises prides itself on “recycling, packaging, and pallet [manufacturing],” an investigation by the U.S. Department of Labor found that the nonprofit organization was guilty of exploiting nearly 250 disabled employees. Rather than paying their workers actual wages, they instead paid their workers in small gift cards.

This incident alone highlights one of the massive issues with the 1938 FLSA loophole. While the disabled individuals of the Self Help Enterprises were aware that federal law permitted them to be underpaid, they were not aware that it was still illegal for their employers to pay them in gift cards. This confusion around subminimum wages allowed for Self Help Enterprises to escape the consequences of their misconducts for a long time, and on the longer scale, inherently allowed for the exploitation of the vulnerable disabled. Many disabled individuals are not aware of the extent of the loophole’s leeway, and as a result, sheltered workshops can freely abuse their employees with disabilities without much worry. 

So . . . why don’t we just close this clause, especially since many inhumane outcomes resulted from this loophole? 

The fight against subminimum wages has been going on for a long time, dating as far back as the 1960s and began when Senator Wayne Morse first publicly attacked it. In his criticism, he proposed to gradually transition the “moderately disabled” to a full-minimum wage over a three-year period and argued that the “more severely disabled” be paid at least half of the federal minimum wage. 

Those against him were, unsurprisingly, employers of the disabled, who often claimed that the Morse Proposal was “unrealistic” and “a drain on the economy.” They commonly emphasized that it’ll “deprive disabled people of employment opportunities in the future.”

[PICTURE OF SENATOR WAYNE MORSE]

Nevertheless, the push against the 1938 Fair Labors Act loophole continued, and The National Federation of the Blind pushed for the Morse Proposal to be implemented, urging that disabled workers be given “the same protection of federal law now available to millions of other workers.” In the end, however, legislative powers only modified the Morse Proposal to apply to agricultural employment, permitting disabled labor abuse to continue in other fields.

Attempts to close this loophole continued throughout the years, but none were successful. Opponents often pointed to government benefits—including social security support—that disabled people received as justification to keep the loophole in the FLSA. 

While legislation addressing other disabled issues passed in that time period (such as the 1990 Americans with Disabilities Act), the subminimum wages issue has largely been  ignored up until recently. 

Successful growing calls against subminimum wages began to rise in the 21st century, and the first state to abolish subminimum wages was Vermont in 2002. In addition to that decision, the state also ceased funding sheltered workshops (described earlier), and instead “sends directly to disabled clients for services of their choosing, such as job coaching and transportation.” Nowadays, Vermont is considered the model state for workplace inclusion. Disabled residents in this state are twice as likely to find jobs in this state compared to other states, with nearly 40 percent of disabled workers even working alongside able-bodied people (compared to the 13 percent in the state of Minnesota). 

Other states soon followed in momentum, including—but not limited to—Alaska, Texas, Oregon, and Maine. However, some states (such as New Hampshire) still allow exceptions or just set limitations to subminimum wages in their legislation.

This emerging movement has also been supported by multiple prominent politicians, including former presidential candidates Pete Buttigieg and Bernie Sanders. Finally, subminimum wages also have the chance to be abolished on a federal level, with current Democratic presidential nominee, Joe Biden, proposing to phase out the subminimum wage in one of his campaign promises.