58-year-old Chester Finn is one of the approximately 57 million Americans with a physical or developmental disability. A visually impaired man, Finn spent years working in a so-called “sheltered workshop” — more commonly known today as a “work center,” or a facility that employs large numbers of workers with disabilities — in western New York. He and his fellow workers did a variety of standard factory work, including putting sponges into individual plastic wrappers and sealing them shut, stuffing envelopes, and working in the cafeteria.
But unlike other workers, Finn and the other disabled employees got paid less — sometimes significantly less — than $300 per month.
“I felt that we did hard work,” Finn told ThinkProgress in an interview. “We had to do most things that you do — food servicing, we had to prepare stuff for the individuals. We had to clean up, and we also had to do the dishes and things like that. I felt that they should have been paying us more.”
Even assuming a 20-hour work week, Finn’s pay came out to less than $4 per hour. The federal minimum wage hasn’t been that low (in terms of current dollars) since 1990. But Finn’s wages aren’t against the law.
That’s because a little-known provision called Section 14(c) of the 1938 Fair Labor Standards Act allows companies that employ workers with disabilities to pay them subminimum wages under a special wage certificate. With income inequality and a national minimum wage hike at the center of President Barack Obama’s 2014 agenda, disability advocates say a change is long overdue.
The National Council on Disability (NCD), an independent federal agency tasked with advising the government on issues that affect Americans with disabilities, recently sent a letter to President Obama and Labor Secretary Tom Perez urging the White House to expand the scope of its forthcoming Executive Order raising new federal contractors’ minimum wages to $10.10 per hour. “We were disheartened to learn… that the Administration does not have the intention of crafting the planned Executive Order in such a way as to apply the raised minimum wage to people with disabilities who are currently employed by federal contractors who pay them subminimum wages,” read NCD’s letter.
“Because the Executive Order will not raise the wages of these individuals outright, as a result, the Executive Order will only have a negligible, trickle-down effect on employees with disabilities employed by contractors who pay them subminimum wages, as wages paid under this program will simply be calculated in relation to the new minimum wage. This may mean that a worker receiving pennies an hour today may receive a dime as a result of the Executive Order. Surely we can do better than this.”
According to NCD, Americans with disabilities are about three times as likely to live in poverty than non-disabled Americans, and less than one in five disabled people participate in the workforce. That’s compared to over 68 percent labor force participation among people without disabilities. Other organizations such as the Autistic Self Advocacy Network have argued that the Obama administration has the authority to extend the minimum wage Executive Order to workers employed under a 14(c) certificate.
The Fair Labor Standards Act’s 14(c) exemption wasn’t originally meant to be discriminatory, according to advocates. Rather, it was a patrician approach to integrating the disabled into society that reflected the times. “That was a very custodial way of looking at, ‘How could we help include workers with disabilities into the work force?’” explained NCD Co-Vice Chair Lynnae Ruttledge in a phone interview.
But with huge advancements in both how Americans with disabilities are perceived and the accommodations available to them, why has progress on wage equality been so hard to come by? “Oh, because disability is big business,” said Ruttledge. “The only reason that you can’t get traction with this is because there are large publicly funded nonprofit organizations that make an incredible amount of money getting federal contracts and tax exemptions [and then] being able to use the provisions under 14(c) so that some of their workers will be paid less than minimum wage.”
One such organization is the nonprofit Goodwill Industries. The company proudly proclaims that 7,300 of its 105,000 nationwide employees have disabilities. However, “[i]n 38 states, spanning from Hawaii to Florida, a majority of Goodwill organizations pay workers with disabilities less than the federal minimum wage, while simultaneously spending tens of millions of dollars in executive compensation and travel-related expenses,” according to a 2013 Watchdog.org investigation. Goodwill executive compensation ranged anywhere from $300,000 to over $1 million even as it paid its disabled workers subminimum wages under 14(c) exemptions.
There are those who think that workers with disabilities should be paid the lower wages. Peter Schiff, chief executive of money management firm Euro Pacific Capital and former Ron Paul adviser, came under fire for a recent Daily Show interview where he argued that “mentally retarded” and otherwise disabled employees deserve minimal compensation. “Others may disagree, but I believe a job for such a person at $2 per hour is better than no job at all,” wrote Schiff in a followup column defending his comments.
Advocates and workers with disabilities say the issue boils down to one of human dignity. “[I was talking to a friend] about subminimum wage, and he was talking about a couple of people that he knew in a shelter workshop, and how important it was to keep those people there,” said Finn, who now works for the New York state Office for People with Developmental Disabilities (OPDD). “And I was explaining to him, well, they know nothing else! The only reason that people are in that situation is because no one ever gave them a chance to do anything else.”
“I’ve been a state employee, I’ve been a federal employee, and I can tell you that if you were paying people just based on productivity, you could easily go into any work place and say, ‘at least 10 percent of the people here are not producing at the same level that their coworkers are.’ And I think that it is a disingenuous way at looking at whether or not someone is contributing to the workplace and contributing to the community,” said Ruttledge.