Exploitative or Productivity-Based Social Policy? Decomposing the Components of Disability Subminimum Wages

Many workers in the United States are paid less than the minimum wage. For certain workers, including people with disabilities, Section 14(c) of the Fair Labor Standards Act (FLSA) allows certificate-holding employers to pay workers subminimum wages to support labor market productivity. However, subminimum wages are associated with a range of factors beyond Section 14(c) certificates, and these wages are often linked to poverty. Using 2009–2019 CPS-MORG data and a series of decomposition models, we examine how different individual, organizational, and regional variables contribute to the prevalence of subminimum wages in competitive employment among hourly workers with disabilities, especially those with cognitive or independent living disabilities. Decomposition models show that varying rates were linked to work characteristics and occupational differences, far more than individual variation, highlighting the role of norms and organizations in supporting the use of subminimum wages. Throughout, we emphasize how national policies and their implementation via states and organizations differently affect outcomes for people with disabilities. The findings in this paper speak to earning subminimum wages beyond the Section 14(c) certificate system and come at a time of increased political focus on raising the minimum wage more generally.