When Tim Giarrusso took over as CEO of Human Technologies in 2015, the organization paid about 35 of its more than 300 employees less than federal minimum wage – legally.
The New York-based nonprofit, founded to create employment opportunities for people with disabilities, operated under a law allowing companies to obtain certificates from the U.S. Department of Labor to pay workers with mental and physical disabilities a rate below the federal minimum of $7.25 an hour.
Giarrusso said the subminimum wage was viewed for a long time as a way of providing work to people deemed less productive than their peers.
“In my experience, it was never about the amount the person was or wasn’t making,” he said. “It was the fact that they were working and contributing and being part of something larger than themselves, as opposed to just … sitting in a room, isolated.”
But, over the past decade, disability rights advocates have increasingly pushed companies to end the lower pay practice, describing it as discriminatory, dehumanizing and exploitative. Human Technologies heeded those calls and, in September, officially gave up its last certificate. It now pays all its employees at least minimum wage.
More:People with disabilities make less than minimum wage. The Biden administration wants to change it.
Soon, the roughly 700 other employers across the country who use the practice, known as 14(c), could be required to follow suit – though not everyone who advocates for those living with disabilities is enthused.
A recently proposed Department of Labor plan to abolish the subminimum is being met with mixed reactions from people with disabilities and their families – some of whom see the plan as a step in the right direction toward civil rights, and others who fear it is impractical and could lead to unintended consequences, including widespread job loss.
Time for change
Jewelyn Cosgrove, vice president of government and public relations at Melwood, a nonprofit that employs more than 300 people with disabilities in Maryland, views the subminimum wage as “codified, disparate treatment” for the disabled community.
Melwood once paid many of its employees under the lower wage provision but transitioned away around 2016 after hearing feedback from workers that the “time trial” process it used to calculate wages was dehumanizing, Cosgrove said.
Workers at Melwood who labored under the subminimum wage were timed while completing a series of tasks – from vacuuming a room to tying a trash bag. Their times were compared with an average of how long it took three workers without disabilities to complete the activities and their pay rates were set proportionally.
Antjuane Bridgers, who worked for Melwood in 2009 during the period the organization conducted the timed trials, said he used to watch his colleagues’ faces crinkle with stress every six months as their trials approached.
Bridgers said his colleagues often struggled to pay long-term bills, including rent, mortgages and car payments, because their wages constantly fluctuated based on the results of the trials.
“It was very hurtful to watch that happen,” said Bridgers, who still works at Melwood as a foreman overseeing employees in 20 buildings in Washington, D.C. “Some of the workers felt less worthy. It just made them insecure.”
Cosgrove sees the error in comparing disabled workers’ speeds to an average. The practice, she said, exemplifies the arbitrary nature of the subminimum wage because it shows that even people without disabilities perform duties at varying speeds. She’s become an outspoken advocate for eliminating the policy.
“The opportunities that were available were extremely limited for decades. We’re not at that point anymore,” Cosgrove said. “There are a lot of different options for someone who is currently under 14(c).”
A history of lower wages
When the subminimum wage was first enacted in 1938 under the Fair Labor Standards Act, it was aimed at helping people with disabilities, particularly wounded veterans, find work. Today, about 700 companies hold certificates to pay roughly 38,000 people under the policy.
Most certificates are for “sheltered workshops,” facilities operated by nonprofits that employ people with mental or physical disabilities. For-profit businesses, including grocery stores and other retail shops, that employee people with disabilities typically do not take part in 14(c), according to Department of Labor data.
A Government Accountability Office report found that, between 2019 and 2021, about half of workers paid under the certificates earned $3.50 an hour or less and 5% were paid 25 cents per hour or less.
But use of the subminimum has been dwindling. According to data from the Department of Labor, in 2023 people with disabilities were employed at 22.5%, the highest rate in history. At least 14 states have eliminated the practice and four others have introduced legislation to abolish it. Data available in those states shows an uptick in employment for people with disabilities since the measures were enacted, though the data does not provide details on how work hours and types of jobs have changed.
The Biden administration unveiled its proposal to end the subminimum wage in December. If implemented as is, it would require the Labor Department to immediately stop issuing new 14(c) certificates and phase out existing ones over three years.
Initial comments on the proposal are due by Jan. 17 – three days before President-elect Donald Trump takes office. The Republican leader’s administration will likely be charged with overseeing the policy and could choose to abandon it.
Neither Trump’s transition team nor his nominee to lead the Department of Labor, Rep. Lori Chavez-DeRemer, R-Ore., responded to a request for comment about whether they support the proposal to end the subminimum wage.
Family pushback
Some families of people with disabilities are against abolishing the subminimum wage. They see it as a matter of choice.
Jana Wolfe lives in Springfield, Missouri, and said her daughter Heather Ramsey, who has Down syndrome, has worked at a community hospital making the minimum wage and at a sheltered workshop making a subminimum wage. The two experiences didn’t compare, she argued.
When Ramsey got the job helping secretaries at the hospital shortly after graduating high school, Wolfe said she was proud that her daughter was working in a community-facing position that paid the minimum wage, plus yearly bonuses.
But four years into the job, Ramsey was inexplicably fired when a new manager came onboard. As Wolfe probed for more details, she soon learned that Ramsey wasn’t happy with the job. She would often eat lunch by herself and was left out of social interactions after work, Wolfe said.
“I realized it was my pride that kept her competitively employed,” she admitted. “That was my pride. That was not hers.”
Ramsey soon asked if she could apply for a job at SWI Industrial Solutions, a sheltered workshop, where her friends were employed. She’s worked there for more than 20 years.
“If you ask Heather, which I have done multiple times over the years, ‘Do you like the workshop? Do you like what you do?’ Her response is always: ‘Yes, I work with my friends. This is my family, and it is like a home to me,’” Wolfe said.
She believes the workshop provides a safe, supportive environment for her daughter and people with disabilities that can’t be replicated in other workplaces. And she says that alternatives to employment, including social programs for people with disabilities, don’t offer the feeling of fulfillment Ramsey and her friends get from working a 40-hour week.
If the subminimum wage is abolished, SWI General Manager Dave Dunn predicted the organization would need to lay off a third of its roughly 400 workers. The organization contracts with corporations to provide packaging and assembly services. Those contracts don’t pay enough to cover the minimum wage for all employees, Dunn said.
Other sheltered workshops say they’re in a similar position.
Jay Belding, a former special education teacher, founded the workshop Associated Production Services Inc. in Pennsylvania in 1977 with his wife to provide vocational services to people with disabilities. The nonprofit helps employees who want to find competitive wage positions in the community, but few do, Belding said.
He suggested that efforts to abolish the subminimum wage policy are rooted in idealism, rather than reality. Belding acknowledged that sheltered workshops are “not the end all and be all” but said he was skeptical that eliminating the subminimum wage would lead to desirable outcomes.
“Show me plan B. I don’t see it,” Belding said. “I have an autistic brother who’s 72 years old, and my parents are both dead, and they were worried every day of their life, who’s going to take care of Tim … if you haven’t shared that burden, you don’t know.”
Charting a path forward
Julie Christensen understands apprehension about eliminating 14(c). Christensen serves as the executive director of the Association of People Supporting Employment First, an organization that has worked for decades to increase the inclusion of people with disabilities in the workplace.
She knows that policy changes come with risks. But Christensen said she still believes axing the subminimum wage will open opportunities for people with disabilities if done correctly.
“I have seen people with the most significant disabilities get amazing jobs at incredible wages,” Christensen said. “My conscience won’t allow me to not want that opportunity for everybody.”
By phasing out the policy over a period of years, she said the Department of Labor’s proposal is designed to give employers and workers time to adjust to the changes and, hopefully, mitigate negative outcomes – including sweeping job losses.
However, some organizations who’ve already nixed the subminimum wage, like Human Technologies in New York, took much longer than the proposed three years to wean off the practice.
Human Technologies began discussing ways to eliminate the subminimum wage in the early 2010s, when it saw a surge in criticism over the policy. In 2015, Giarrusso said the organization opted not to create more types of work that would require a lower wage and instead searched for high-profit jobs it could modify to fit employees’ abilities.
The process took around a decade and lots of imagination. One solution was pottery. Giarrusso teamed up with the ceramics company 4 Elements Studio to design a way for workers with disabilities to make porcelain-glazed pieces that sell for around $90.
“Until you change the boundaries at which you’re operating, the solutions and the possibilities don’t change,” Giarrusso said of the process of developing new types of jobs.
Giarrusso has empathy for organizations that for years have operated under 14(c) and could need to reevaluate their business if the federal rule goes into effect. But he is hopeful that Human Technologies may help provide a road map for how those companies can end the subminimum wage.
“If you don’t believe that you can employ and compensate people with very severe disabilities at or above minimum wage, then you’ll never see it,” Giarrusso said. “Because that’s what you have to do in order to see it come true: You have to create it.”
Contributing: Bart Jansen
