Somehow It’s Still Legal to Pay Disabled People Less Than Minimum Wage
The program has become less popular over time, partly because state and local governments often judge the subminimum wage discriminatory, and partly because a 2014 law narrowed the circumstances under which disabled workers could be paid subminimum wage. The Covid epidemic also reduced enrollment. As a consequence, the total number of employers who possessed such waivers fell from 5,612 in 2001 to 3,117 in 2010 to 801 this past May. The number of disabled workers participating in the program fell during that time from 424,000 to 40,579.
The disabled subminimum was implemented originally to create employment opportunities for this group. The Labor Department argues, persuasively, that such opportunities have now grown substantially, especially since passage in 1990 of the Americans With Disabilities Act, with more than twice as many mentally disabled people now paid minimum wage or above compared to those paid subminimum wage. Paying disabled workers a subminimum wage once made sense as a means to encourage employers to hire them, but the practice has outlived its usefulness.
The other group that employers can get away with paying subminimum wage are tipped workers. During the 2024 campaign, Kamala Harris proposed eliminating the $2.13 tipped hourly minimum. (More regrettably, she also endorsed Trump’s idiotic proposal to eliminate taxes on tips.) The Biden administration in 2021 narrowed the circumstances under which workers could be paid the tipped subminimum, reversing a Trump-era rule that increased use of the tipped subminimum, at a cost to workers that the Economic Policy Institute estimated at $700 million annually. In August, the regulation-unfriendly Fifth Circuit vacated the Biden rule, citing its expanded authority to legislate from the bench under the Supreme Court’s ruinous Loper Bright ruling two months earlier (which ended the 40-year doctrine, known as Chevron deference, by which judges were expected to recognize the superior expertise of regulatory agencies).
