DULUTH — Josh Haug patiently folded towels one by one from a giant green box at Essentia Health fitness center in Duluth on Tuesday, piling them into neat stacks.
The 41-year-old, who has an intellectual disability, earns more than minimum wage working two shifts a week laundering and delivering clean towels to gym-goers, a dramatic change from nearly two decades when he and dozens of other disabled people did odd jobs in a segregated facility for “a pittance,” his mother, Joan Steinke, said.
“It would be a great month if he came home with a check for $17, but right now he’s making $11 an hour,” she said. “Having his own money and being responsible has given him a lot of pride.”
The state is pumping in additional grants to help employers move away from the decades-old practice of paying disabled people subminimum wage to do repetitive tasks in facilities known as sheltered workshops, but lawmakers last year stopped short of eliminating subminimum wage, opting not to join more than a dozen states that have ended the practice.
This was a blow to many disability rights advocates who had hoped that lawmakers would follow the state task force’s recommendation and eliminate subminimum wage wages in 2025. They plan to resume the effort when lawmakers resume work in St. Paul next week, with some advocates now proposing the elimination date for subminimum wage wages be 2028. It remains to be seen whether state leaders will change their minds on the issue.
“As long as we allow wages below the minimum wage, we are sending a universal message to all of Minnesota that people with disabilities are worth less than the minimum. [others]”We’re not going to let the minimum wage go to the people who are working to reduce it,” said Jillian Nelson of the Minnesota Autism Society, co-chair of a task force working to reduce the number of workers below minimum wage.
More than 3,200 workers with disabilities work for less than, and often much less than, the Minnesota minimum wage ($10.85 for large employers and $8.85 for small employers), giving the state the fifth-highest number of workers below the minimum wage in the nation, according to U.S. Department of Labor data.
Other activists, many of them parents of adult children with severe disabilities, are adamantly opposed to eliminating subminimum wage, arguing that states should preserve the option to work in center-based programs isolated from the community.
Carlyle Ford Lange has tackled this issue both as a parent and as an economist: His daughter, Elizabeth Lange, 36, has a genetic disorder called Smith-Magenis syndrome and has been a Merrick client for more than a decade, earning less than the minimum wage.
“She has a very clear sense of accomplishment in this job, she enjoys working with her friends and colleagues,” he said. “It’s a big part of her life.”
Runge, a professor of applied economics and law at the University of Minnesota, said the long-term impact of eliminating subminimum wages would be “enormously damaging. The labor market is cruel, and it would put workers with disabilities out of work.”
His concerns are shared by Republican Sen. Jim Abeler of Anoka, who said lawmakers faced with a proposal to eliminate subminimum wages last session opted for a compromise.
“At market prices, there’s just no room for some of these individuals to work,” he said. [subminimum wage] If it goes away, people will continue to stay at home.”
Maren Halden, supervising attorney for the Minnesota Disability Law Center, countered that eliminating subminimum wage wages doesn’t mean workers have to change where they work or what they do. The state has a plan to phase out subminimum wage wages and is dedicating significant resources to addressing concerns, Halden said.
“Workers in this country deserve basic protections, but for decades, many workers with disabilities have been excluded from those protections,” Haldane said. “It is long past time for this to change.”
Employers move away from sub-minimum wage wages
The U.S. Commission on Civil Rights recommended Congress repeal laws allowing subminimum wage pay in 2020. The commission suggested a phase-out period to allow service providers and people with disabilities to transition to other options, and said its priority was community-integrated, competitive-wage jobs.
The Federal Ministry of Labor said in September it would review the use of federal certificates, which allow employers to pay wages below the minimum wage, and consider the impact of stopping their issuance.
In Minnesota, 54 employers have issued or are pending certification, down from about 70 a year ago. The state still ranks third in the nation for issuing certifications.
Heidi Hamilton, director of disability services for the Minnesota Department of Human Services, said providers anticipate subminimum wage may go away. “They really want to get ahead of the curve and find ways to make it happen without being forced to do it.”
Lawmakers allocated more than $5 million in grant funding in the current biennium budget to help employers transition to more inclusive workplaces and to help counties, tribes and other organizations create employment opportunities for people with disabilities. The state also set aside funding for training case managers and began requiring service providers to report the number of workers they pay below the minimum wage. In 2022, the state provided $10.5 million in grant funding to help people with disabilities access mainstream employment.
State grant funding was key when central Minnesota’s Phase Industries stopped using subminimum wage rates last summer. CEO Tim Schmutzer said the nonprofit’s annual survey showed a common theme: people want more job opportunities, better wages and want to work in their communities.
“That repetitive, monotonous work, done day after day, for years, at a low wage that was only legally available to people with disabilities and prison inmates, was, quite frankly, no longer meaningful, useful or humane,” he said. “So we said, ‘Now is the time. Let’s give it a go.'”
Instead of its traditional default of transporting groups of people with disabilities to a facility together, he said, the nonprofit is moving toward individual employment plans with the goal of securing competitively paying jobs in the community. But he noted that he’s also heard from clients and their parents who want to continue working with the same friends they’ve had for decades.
Schmutzer said service providers need to balance different preferences and make sure people aren’t left behind.
Andrew Kastle, a Harris group home resident, worked subminimum wage jobs such as lawn care at Fay’s Industries for 10 years and now washes dishes at the Grand Casino Hinckley.
“I love it,” Kastle, 39, said of the job that pays about $15 an hour. “It’s much better. I get some time to myself, it’s fun and you trust me.”
The money he has made has allowed him to travel north and he is planning a visit to Deadwood, South Dakota.
“There’s a lot of things I can do now that I couldn’t do or afford before,” he said. “I’m finally getting my due.”