What's Wrong With Goodwill Using A Minimum Wage Exception To Employ Disabled People?


There is an exception to the minimum wage laws which allow companies to pay disabled workers less than the legal minimum. Now Goodwill, the national thrift shop chain, is coming under fire for using that exception:

In a recent investigation for Watchdog.org, I reported that a majority of Goodwill entities in the United States pay people with disabilities less than the federal minimum wage, while these same Goodwills simultaneously spend tens of millions of dollars per year on executive compensation and travel-related expenses.

More than 100 Goodwill entities employ workers through the Special Wage Certificate program, a Depression-era loophole in federal labor law that allows organizations to pay subminimum wages to people with disabilities. According to Goodwill, 7,300 of its 105,000 employees are subject to the minimum wage exemption that affects 300,000 workers nationwide. My investigation revealed that these same Goodwill entities that use the special wage program simultaneously spent $53.7 million in total executive compensation.

It’s a little unfair, I think, to criticize Goodwill for this. The alternative to paying disabled workers less than the minimum wage is more than likely Goodwill not employing any disabled workers at all.

Labor markets operate like any other. Employers want to pay a wage that’s in keeping with the value of the employee they’re paying it to. It may not be very politically correct to say so, but disabled workers simply aren’t as valuable.

What the minimum wage does is price these workers out of the labor market by inflating wages beyond what they’re worth. Given the choice between paying the minimum wage to a disabled worker, or a non-disabled worker, employers are going to opt for the non-disabled worker.

The exception to the minimum wage law is a good thing. It gives employers flexibility, and allows disabled workers to find a place in the job markets. Better, for them, to have a job at a lower wage than to have no job at all.