Disability Rights and Subminimum Wages

Author: Laura Pettigrew

July 17, 2026

A broom factory for the blind [Image credit: National Photo Company Collection, Public domain, via Wikimedia Commons]

The History and Current Status of Subminimum Wage in the United States

In 1938, the Fair Labor Standards Act was passed in the United States (U.S.). It banned child labor, set overtime pay, and established a minimum wage (Grossman, n.d.). It also established exceptions to the minimum wage. One possible exception is people with disabilities (Wage and Hour Division, n.d.-b). After receiving a certificate from the Department of Labor, employers are legally allowed to pay employees with disabilities less than the minimum wage based on productivity. There is no minimum limit to how much employers can pay (Crawford & Goodman, 2012). Goodwill Industries, a charity known for providing employment for disabled people, pays some disabled employees as little as 22 cents per hour (Schecter, 2013). 

Because of changing federal policies, state policies, and opinions, the usage of subminimum wage is decreasing across the country (U.S. Government Accountability Office, 2023). From 2018-2023, the number of disabled employees being paid subminimum wages went from 130,000 to 43,000 (Heigl et al., 2024). In 2024, approximately 38,000 employees with disabilities were paid subminimum wage in the U.S. (Disability Belongs Staff, 2026). 90% of these workers had intellectual or developmental disabilities (IDD) (Sawo et al., 2025). 

The U.S. federal minimum wage has not increased since 2009, when it was raised to $7.25, although many states have set a higher minimum wage (Wage and Hour Division, n.d.-a). According to cost-of-living calculators, $7.25 is almost 10 dollars too low to achieve an adequate standard of living (Economic Policy Institute, 2023). If even minimum wage is insufficient, employees being paid subminimum wage have no way of independently living without subsidizing their income. Both disabilities and subminimum wages are associated with poverty, and the effect of subminimum wages on poverty is compounded for people with disabilities (Maroto & Pettinicchio, 2023). In 2018, 30.8% of individuals with cognitive disabilities lived in a household that was below the poverty line (Winsor et al., 2021).

Because of the high percentage of employees with IDD, workers may be unaware of their rights (Crawford & Goodman, 2013). From 2016-2024, investigators from the Wage and Hour Division of the Department of Labor found more than 250 certificate holders had violated the provisions of the Fair Labor Standards Act, resulting in millions of dollars in back pay (Employment of Workers With Disabilities, 2024). 

The segregated nature of most certificate holders also means that employees can be taken advantage of more easily. An extreme example can be found in the case of Hill County Farms, also known as Henry’s Turkey Service. In 2009, an investigation revealed that a group of intellectually disabled men had been working for decades at a turkey farm for an average of $65 a month and living in squalid conditions. The men were also physically and verbally abused by their caretakers (Barry, 2014; Noguchi, 2013). The segregated nature of the farm and the men’s living quarters meant that the abuse was able to continue for years before authorities intervened.

Sheltered Workshops

93% of subminimum wage certificate holders are sheltered workshops (Sawo et al., 2025). Sheltered workshops are controlled, segregated working environments for individuals with disabilities (Indiana Disability Rights, n.d.). Most have workers performing menial tasks, often with outdated equipment (National Council on Disability, 2018). Because disabled workers are not technically considered employees, they do not receive benefits like health insurance from the companies (Indiana Disability Rights, n.d.). Sheltered workshops seek to support disabled employees and prepare them to work in the general economy by teaching them vocational skills (Legal Information Institute, n.d.). 

Although one of the goals of sheltered workshops is to prepare employees for supported employment, they are ineffective at this goal in practice. A 2001 investigation found that only 5% of employees in sheltered workshops left them for competitive employment (National Council on Disability, 2012). In Missouri from early 2017 to mid-2022, only 2.3% of employees in sheltered workshops transitioned into competitive employment (Hopkins, 2022a). Cimera (2011) found that individuals with intellectual disabilities who were previously employed in a sheltered workshop were not more likely than their non-sheltered workshop peers to be in supported employment. Individuals who had previously been in sheltered workshops also made less money than their peers. Cimera and colleagues (2012) found similar results for employees with autism. 

When compared to competitively employed individuals with disabilities, individuals employed in sheltered workshops have lower job satisfaction and self-esteem (Cimera, 2011). Employees who started in sheltered workshops also require higher support costs than their peers (National Council on Disability, 2012). Individuals with high functioning work ability have an increased quality of life in competitive employment rather than sheltered workshops, but individuals with low functioning work ability have a similar quality of life in competitive employment and sheltered workshops (Shkurkin, 2023).

Some individuals with disabilities and their families prefer to work in sheltered workshops, citing safety concerns and transportation issues (Migliore et al., 2008). Others worry about being unable to perform the required tasks of a job (Sommerstein, 2015). According to Hopkins (2022b), many sheltered workshop employees “felt that their choice wasn’t between sheltered workshops and regular jobs, but rather between sheltered workshops and nothing at all” (para. 13). Workplaces are frequently unsupportive of people with disabilities, leading individuals to rely on sheltered workshops that pay subminimum wages. 

Efforts to Repeal Subminimum Wage Laws and Their Effects

Disability experts, such as the National Council on Disability (2012), recommend gradually phasing out subminimum wage policies. However, none of the efforts to repeal or phase out subminimum wage laws at a federal level have succeeded (Heigl et al., 2024). In 1965, Senator Wayne Morse proposed ending the subminimum wage laws for people with disabilities. Although the proposal was not accepted, the senator’s other proposal of a minimum wage floor set at half the minimum wage was accepted. However, this floor was eliminated in 1986, and the rate employees with disabilities were paid was calculated by their productivity compared to a person without a disability (Crawford & Goodman, 2012).

Although a rule to end the issuing of certificates that allow employers to pay minimum wage was proposed under President Biden in 2024, it was withdrawn in 2025 (Bensen, 2025). Other federal policies, such as the Individuals with Disabilities Education Act, which allows people with disabilities to receive education in an integrated setting, may cause individuals with disabilities to seek out competitive employment instead of sheltered workplaces, contributing to the decline of subminimum wage (U.S. Government Accountability Office, 2023). As of early 2025, 16 states had eliminated subminimum wage (U.S. Government Accountability Office, 2025).

Kakara and colleagues (2024) discovered that, after New Hampshire and Maryland repealed the subminimum wage laws, people with cognitive disabilities in New Hampshire saw increased employment and labor force participation, but those in Maryland saw no difference. They hypothesize that there are state-level differences at play, as New Hampshire spent more on competitive integrated employment services for people with IDD when the law was repealed than Maryland did.

Alternatives and Ways Forward

An alternative to sheltered work is competitive integrated employment (CIE). In CIE, the workers with disabilities work alongside coworkers without disabilities in the community, for minimum wage or above, and receive the same benefits and have similar opportunities for advancement as employees without disabilities (Office of Disability Employment Policy, n.d.). CIE is associated with better outcomes, such as increased quality of life, for people with disabilities (Taylor et al., 2023). In 2018, 21% of individuals who received day support from state IDD services also participated in integrated employment services (Winsor et al., 2021).

Winsor and colleagues (2021) outline the barriers to integrated employment in their report for the Institute for Community Inclusion: “inconsistent policy, variable allocation of [community rehabilitation provider] resources, problematic funding mechanisms, and insufficient professional development for staff” (p. 9). 

The problem of subminimum wage is not an easy one to solve. If all sheltered workshops were shut down today, some individuals with disabilities would be left without jobs, as low-paying as they are. Thus, experts recommend gradually phasing out subminimum wage and bolstering the nation’s resources for integrated employment (Employment of Workers With Disabilities, 2024; National Council on Disability, 2018). 

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Glossary

• Competitive Integrated Employment (CIE): Work in which the employee with a disability is paid at or above minimum wage alongside employees without disabilities, while receiving the same benefits and opportunities for advancement as employees without disabilities

• Disability: A physical or mental condition that impairs major life activities

• The Fair Labor Standards Act: 1938 act that codified a minimum wage, the rate of overtime pay, and recordkeeping requirements, and banned child labor.

• Integration: Joining different groups of people into society

• Intellectual or developmental disabilities (IDD): Conditions that are present at birth and affect an individual’s physical, intellectual, or emotional development

• Minimum wage: The least amount of money that employers are required to pay certain employees

• Segregation: Keeping a group of people separate from other groups and treating them differently, especially on the basis of social categories like race, sex, or disability

• Sheltered workshops: A controlled working environment for people with disabilities that prepares them for work in the general economy

• Subminimum wage: Pay that is below the minimum wage

• Supported employment: Services to assist individuals with disabilities to find and keep employment in the community

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References

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