“Most of economics can be summarized in four words: ‘People respond to incentives,’” says economist Steven E. Landsburg. “The rest is commentary.” The same can (mostly) be said about electoral politics: Politicians respond to incentives.
Politicians are often derided for following the crowd rather than leading on public policy. But in doing so they are often acting rationally. To gain votes you have to give people what they want, even if want they want is ultimately harmful.
When we can see or predict the destructive outcome of such policies there is a tendency to assume the politicians motives were dishonorable. But more often than not, politicians who endorse bad policies have noble motives — even if it is nothing more than the desire to give voters what they asked for.
I believe that is true in the case of Hillary Clinton, who became the first major presidential candidate to ever recommend paying all disabled workers the minimum wage. I assume her motives are perfectly pure, even though the result would lead to increased unemployment for disabled workers.
Currently, if you want to hire someone, the minimum you can pay a worker is either zero or the federally mandated minimum wage. You can get away with paying nothing at all if you call the job an “internship” and comply with a half-dozen government requirements. Otherwise, you must pay the worker $7.25 an hour.
But there is an exception to that rule. In 1938 Congress instituted what’s known as the 14c exemption to the Fair Labor Standards Act, which allows employers to obtain a special wage certificate from the Department of Labor that waives their obligation to pay disabled individuals the federally mandated minimum wage.
With this exemption an employer can pay a “commensurate wage,” a sub-minimum wage paid to a worker with a disability that is based on his or her individual productivity (no matter how limited) in proportion to the productivity of experienced workers who do not have disabilities performing essentially the same type, quality, and quantity of work in the vicinity where the worker with a disability is employed.
How is this commensurate wage determined? As the U.S. Department of Labor explains:
In very simple terms, if the worker with a disability is 60% as productive when performing a particular job as is the experienced worker who does not have a disability performing the exact same job, the commensurate wage for that worker with a disability would be at least 60% of the prevailing wage (the wage rate paid to the experienced worker who does not have a disability).
Here’s an example of how it works: In a widget factor the average worker can produce 100 widgets an hour, for which they earn $8 an hour. A disabled worker, however, may only be able to produce 50 widgets an hour. Because their productivity is only 50 percent of the average, they get half the average pay: $4 an hour.
Based on this standard, the employer has nothing to gain by hiring disabled workers and would do so simply out of charity. Instead of paying one fully productive worker, they could hire two disabled workers at 50 percent functionality. But the employer would gain no real benefit and so has no incentive to exploit disabled workers. Indeed, the employers who most often qualify for the exemption are non-profits like Goodwill Industries whose goal is to provide job skills and opportunities for the disadvantaged.
But some progressive disability rights activists decry this system as unfair. They point out that there may be little to no economic benefit for someone who may only earn a few dollars for their labor. On this point they are mostly right. But no one is expecting disabled people to be able to support themselves financially on $1 an hour. And they miss the reason this exemption is necessary and beneficial: work is about more than money — it’s also about the dignity of contributing to the world, to using our vocations to serve our fellow man.
By eliminating the 14c exemption we would be telling disabled workers that since their productivity is not able to meet the threshold for the minimum wage, they must either work for no compensation (like unpaid interns) or else not be allowed to work at all.
It’s bad enough the government already sends this message to low-skilled workers. Why would we want to tell disabled workers they too aren’t worthy of having a job?
Politicians like Clinton have an obvious incentive to pander to voters who decry “inequitable pay.” But noble motives are no excuse for harming those who are most in need of the dignity of work.
