Should President Barack Obama succeed in pressing Congress to lift the federal minimum wage from $7.25 to $10.10 an hour, individuals with disabilities currently working at “subminimum wages” would see their pay rise, too.
But they might also see their job opportunities shrink.
If the Senate’s 54-42 vote against the Fair Minimum Wage Act this past Wednesday is any indication, Congress seems unlikely to move on the issue in the near future.
Yet the discussion over wages at the lowest levels of the economy has brought renewed attention to the sometimes controversial practice of paying less than the minimum wage; 5.4 percent of Pennsylvania workers — including teenage trainees, home care aides, tipped employees and individuals with disabilities — receive subminimum wages.
“The evidence suggests that the least skilled and most disadvantaged will have to accept most of the employment losses of raising the minimum wage,” said labor economist Gary Burtless for the Brookings Institution in Washington, D.C., noting that employers might offer fewer work hours if required to pay higher wages.
This might be most true for workers with disabilities whose earnings — unlike those of other “subminimum wagers” — would uniformly rise with the federal minimum wage.
Under a 1938 provision of the Fair Labor Standards Act, the wages of workers with disabilities can be reduced if a timed test conducted by the Department of Labor and Industry shows them to have a lower productivity level than a employee without disabilities. If the employee with disabilities requires more time to generate the same amount of output, proportional wages are set.
For example, a worker who needs two hours to complete a task typically done in one hour would be paid $3.63 an hour. Under the federal contract proposed by the Obama administration, that worker’s annual income, based on 40 hours a week, would rise from $7,540 to $10,504.
The practice allows franchises such as Applebee’s restaurants or Goodwill Industries to hire individuals with physical and mental disabilities to perform a wide variety of jobs at wages as low as 28 cents an hour in the state of Pennsylvania. These tasks might include janitorial work or sorting hangers by colors for independent retailers.
Supporters of the 1938 provision argue that present-level subminimum wages compensate for the added cost of providing workers with disabilities with workplace accommodations or special training.
“Intellectual and developmental disabilities especially require specific skills training,” explained Ella Holsinger of Goodwill Southwestern Pennsylvania in Lawrenceville. The nonprofit currently pays subminimum wages to workers with disabilities in 64 of its 165 affiliates.
Opponents of the practice view subminimum wages as opportunities for exploitation.
“Workshops across the country take advantage of individuals with disabilities through these wages,” said Stephen Christian-Michaels, president and CEO of Family Services of Western Pennsylvania, a nonprofit offering behavioral health, rehabilitation and residential services to those in need.
“The whole thing is surrounded by a tremendous amount of controversy,” said Mr. Christian-Michaels. He believes the system helps individuals with intellectual disabilities to gain employment, but that some individuals with physical disabilities could work in competitive employment and are given no choice.
As the debate plays out, the population of people with disabilities continues to struggle to find employment in the recovering job market.
A census published in June 2014 by the Bureau of Labor Statistics found that 12.9 percent of the population with disabilities is unemployed — a figure well above the overall 6.1 percent rate.
The employment picture has improved. The 12.9 percent jobless rate represents a 1.3 percent improvement over the 818,000 Americans with disabilities who were unemployed in June 2013, a reflection of the broader decrease in unemployment across the population.
Correction (Posted July 18, 2014) An earlier of this version incorrectly characterized Stephen Christian-Michaels‘ position on the role of subminimum wages for vocational workers.
Rocio Labrador: email@example.com or 412-263-1370.