Virginia governor candidate connected to firm that paid disabled worker 11 cents an hour

A company owned by the investment firm that Virginia’s Republican gubernatorial nominee once led took advantage of a minimum wage loophole to pay employees with disabilities less than the minimum wage. At least one employee was paid just 11 cents an hour.

Glenn Youngkin is running for governor on a promise of creating jobs in Virginia, based on his long tenure at the helm of the Carlyle Group and the claim that he’d be a job creator in the mold of former President Donald Trump. When Trump, who has endorsed Youngkin, left office after one term, the United States had seen a net loss of 3 million jobs compared to when he took office.

According to a 2009 report published in the Des Moines Register, a Nebraska-based company owned by the Carlyle Group paid an Iowa worker with a disability just pennies per hour for work packaging, labeling, and sealing its goods.

Oriental Training Co., purchased by Carlyle in 2006, was a “direct marketer of party supplies, novelties, toys and children’s arts and crafts, and leading marketer of school supplies and value-priced home décor and giftware.” Carlyle owned the company until it declared bankruptcy in 2010 and was eventually bought by Berkshire Hathaway.

A spokesperson for Iowa’s Department of Human Services told the Register that the Oriental Training Co. paid the worker on a “piece-rate basis,” rather than on the basis of how many hours were worked, thus resulting in an average salary of 11 cents per hour.

A disability rights advocate told the outlet that the arrangement did not respect the worker’s full potential. “Eleven cents an hour does seem low,” Sylvia Piper of Iowa Protection and Advocacy said. “Is there something else, some other job, these people could do that would be of greater value to them and to the employer?”

Youngkin was a key executive at the firm at the time, serving as global head of its industrial sector investment team.

At a campaign event in February, he promised voters that he would completely stand by his corporate record. “I will own everything that happened at Carlyle, because I was there,” he pledged. “I will never walk away from anything I did in my business career.”

The subminimum wage loophole dates back to the 1930s. At the time, the minimum wage was enacted with an exception for what Labor Secretary Frances Perkins called “substandard workers.” The wage floor does not extend to workers with “a physical or mental disability, including those related to age or injury,” who are deemed not capable of performing their jobs as well as other workers.

Under Section 14(c) of the Fair Labor Standards Act, employers can obtain certification to pay workers thus categorized less than the minimum, based on productivity. The Des Moines Register’s reporting was based on a review of certificate records maintained by the Department of Labor.

Today, disability rights advocates say the exception, while originally intended as a way to encourage the hiring of persons with disabilities, is exploitive and unnecessary.

Lucy Beadnell, the director of advocacy for The Arc of Northern Virginia, a nonprofit organization that supports people with intellectual and developmental disabilities, told the American Independent Foundation in an email that repeal of the exception is “long overdue,” after decades’ worth of data has shown people with disabilities can be just as successful as those without.

“People with disabilities deserve the same human and civil rights as the whole population. In fact, disability rights are human rights. Everyone deserves equal pay for equal work. The Arc of Northern Virginia strongly supports an end to subminimum wage.”

“Generally the only push back we see on ending subminimum wage comes from people or organizations who profit from the practice,” Beadnell wrote, “or people with disabilities and their families who have been led to believe their loved one is unemployable unless they are paid less than others for their work.”

Beadnell noted that a similar exception exists under Virginia’s minimum wage law. With her organization’s support, a group of Virginia Democrats filed a bill last year to close the loophole. It passed in the House of Delegates, but stalled in the Senate.

The American Independent Foundation reached out to Youngkin’s campaign and the Carlyle Group to ask if and how they addressed the situation at Oriental Trading Co. Carlyle did not immediate respond.

A spokesperson for Youngkin suggested that Youngkin’s Democratic opponent, former Virginia Gov. Terry McAuliffe, was responsible based on his history of putting some of his own money in investment funds managed by the Carlyle Group.

“Ask Terry McAuliffe, who invested in and directly profited from this,” the spokesperson said.

While the spokesperson chose not to address whether Youngkin supports closing the minimum wage loophole, the candidate has previously indicated a hostility to Virginia’s living wage law existing for anyone.

“We know for a fact that when you impose a $15 minimum wage broadly across Virginia, we are going to lose jobs,” he told a local television station in June. “We must get our economy open, we have to carve back the mounds of red tape that have been piled on businesses. And I believe our small businesses and entrepreneurialism in Virginia has been absolutely crushed.”

McAuliffe has backed a $15 minimum wage and has a record of working to protect Virginians with disabilities.

During his previous term as governor, he issued a series of executive orders in 2015, still in place today, guaranteeing equal employment opportunities for disabled Virginians. He also worked to expand accessibility at the governor’s mansion, increase state services for disabled Virginians, and invest more in education for children with disabilities.

In an emailed statement on Monday, Democratic Party of Virginia spokesperson Manuel Bonder pointed out the candidates’ differing records.

“Glenn Youngkin will always put himself first, no matter the cost. Youngkin’s track record of harming people with disabilities in order to turn a profit is appalling — and it is yet another reminder that he belongs nowhere near the governorship,” Bonder wrote. “As governor, Terry McAuliffe fought to protect and uplift Virginians with disabilities — and he will do so again.”

Published with permission of The American Independent Foundation.