Flexible pay keeps opportunities open for disabled workers

On April 23rd, a group of United States senators sent a letter to U.S. Department of Labor (DOL) Secretary Alexander Acosta demanding information on DOL’s supervision of employers granted “14(c) waivers.”

The letter explains that, pursuant to Section 14(c) of the Fair Labor Standards Act, DOL may issue waiver certificates to eligible employers that allow them to pay workers “whose earning or productive capacity is impaired by age, physical or mental deficiency” a ”special minimum wage” that is lower than the federal minimum wage. The letter implies that DOL may not be doing enough to “prevent employers’ mistreatment of and discrimination against workers with disabilities.”

{mosads}It is admirable that these lawmakers seek to investigate the potential abuse of highly vulnerable members of the workforce. Indeed, individuals with intellectual disabilities are particularly vulnerable to mistreatment and might therefore benefit greatly from a government guardian. Moreover, workers with mental or physical disabilities may be more reluctant than their colleagues without disabilities to report mistreatment because of limited communication abilities or fear of greater abuse or isolation. The desire to root out all instances of abuse is appropriate and honorable, and DOL should maintain a zero-tolerance policy for such behavior.

However, DOL should not acquiesce to the letter’s additional proposal that the waivers be “phased out” altogether. Far from protecting workers with disabilities, this regulatory approach will likely deprive them of employment opportunities.

The letter’s signatories claim that the exemptions should be phased out because they are “inherently discriminatory.” The thrust of their argument is that it is harmful to disabled workers to pay them at a rate commensurate with their productive capacity if that wage rate is lower than the federal minimum wage. The aim is commendable, but reality may not cooperate.

The problem is that phasing out the exemptions would actually encourage employers to discriminate against the disabled: employers will be forced to choose between a worker whose “earning or productive capacity is impaired by age, physical or mental deficiency” and a non-disabled worker of similar experience whose productive capacity is, presumably, higher — and pay them the same wage. Even if an employer would prefer to hire the disabled worker for the many benefits that worker may provide the employer, the realities of business may make it untenable to risk hiring at a wage rate beyond that which is justified by the individual’s productive capacity.

The awkward reality is that phasing out these special certificates raises the bar for entry into the workforce for the disabled, thus harming most those it would be intended to help. The many problems with government-mandated minimum wages are applicable here, including the fact that they increase unemployment by limiting opportunity for those seeking work whose low skills or lack of experience would justify only a lower wage rate.

The urge to mandate higher wages than the market sets comes from a noble place, but experience and logic establishes that the real-life consequences are almost wholly bad. If the door to opportunity for these workers remains open, the tremendous value that they can bring to the workplace and to their communities is more likely to be recognized and compensated accordingly.

Finally, the senators’ letter suggests that disabled workers seek employment only, or primarily, for money. This misses the reality that many workers — disabled or not — may have a greater interest in working for the purpose it generates in their lives, the feelings of being needed and a part of society that working can create. And, in many cases, disabled workers have additional income sources, such as social security benefits, or living arrangements, such as with unpaid caregivers, that mitigate the necessity of earning a higher wage, which suggests that they have other reasons for seeking work.

In short, the senators’ letter to DOL ignores the unintended consequences of their well-meaning proposal, as well as the reasons many people seek employment. If the government prohibits disabled jobseekers from accepting employment for wages lower than regulators find suitable, it not only arrogantly asserts that it knows what’s best for them, but it also denies our disabled peers the opportunity, indeed the right, to manage their own lives, liberty, and pursuits of happiness. 

Devon Westhill is director of the Federalist Society’s Regulatory Transparency Project. The views expressed here are his own.