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New Government Accountability Office report: Majority of subminimum wage workers earned less than $3.50 per hour, far below federal and state minimum wages

Casey efforts resulted in funding for Dept. of Ed program to phase out subminimum wage, create inclusive jobs

Washington, D.C. - Today, U.S. Senators Bob Casey (D-PA) and Steve Daines (R-MT) and U.S. Representatives Bobby Scott (D-VA-3) and Cathy McMorris Rodgers (R-WA-5) are announcing introduction of the Transformation to Competitive Integrated Employment Act, (TCIEA) legislation to end subminimum wages for people with disabilities. Currently, the Fair Labor Standards Act permits employers to pay people with disabilities below the minimum wage if they hold a certificate to do so. The TCIEA would end this discriminatory practice and support employers transitioning to paying competitive, fair wages to people with disabilities to work in integrated settings in their communities. People with disabilities are better able to achieve financial independence and spend more time engaging in their communities when they transition to competitive employment and work in integrated environments—workplaces that hire both people with disabilities and people without disabilities. The majority of subminimum wage workers have an intellectual or developmental disability and are paid less than $3.50 an hour.

Sen. Casey and Rep. Scott are also highlighting the results of a new report they requested from the Government Accountability Office (GAO) detailing the Department of Labor’s (DOL) oversight of the 14(c) certificate program, which allows employers to pay subminimum wages to workers with disabilities. The report finds that between 2012 and 2021, DOL’s Wage and Hour Division (WHD) identified over $15 million in unpaid back wages owed to more than 73,500 14(c) employees due to employers’ failure to fairly compensate employees.

“Paying workers less than the minimum wage is unacceptable. Everyone deserves to be paid a fair wage, and Americans with disabilities are no exception. This commonsense, bipartisan bill would lift up people with disabilities by raising their wages and creating competitive jobs in workplaces that employ both workers with and without disabilities,” said Senator Casey.

“Montanans with disabilities contribute to our communities and their work is valuable—they should never be paid below minimum wage. There is dignity and hope in work, so we should be doing all we can to expand opportunity and ensure fair pay to Montanans with disabilities in the workforce,” said Senator Daines.

“While GAO notes that the number of employers authorized to pay subminimum wages under the 14(c) program decreased by 50 percent between 2010 and 2019, the data suggest that most 14(c) workers are earning less than $3.50 per hour.  In other words, they are still being denied equal opportunity in America,” said Ranking Member Scott. “It is long past time for Congress to phase out the subminimum wage for workers with disabilities and expand access to fulfilling employment and economic self-sufficiency.  By fostering collaboration between employers and services providers, this bipartisan legislation makes clear that it is not only possible, but beneficial, to invest in fully integrated and competitive jobs for people with disabilities.  We must take this next step to ensure that every worker can succeed in the workplace and earn a fair wage.”

“America is the land of opportunity where no one is defined by the conditions of their birth. It’s in this spirit that we should be doing everything we can to bring people with disabilities off the sidelines and into the workforce,” said Rodgers. “This work started with creating and expanding ABLE accounts, which are empowering individuals with disabilities to reach their full potential. Today, with this bipartisan legislation, it continues on the next policy frontier – employment. Together, we can end the outdated practice of paying individuals with disabilities a subminimum wage and help them live more independent lives.”

Mark Riccobono, President of the National Federation of the Blind, said: “States, federal agencies, and employers themselves increasingly recognize that it is time to move away from the antiquated model of segregated, subminimum-wage employment and toward allowing the blind and other disabled Americans to participate in the kind of meaningful, remunerative work that others take for granted. Blindness or disability does not equal lack of capacity to engage in competitive, integrated employment, and we applaud Chairman Casey for rejecting eighty-five years of false thinking about our capabilities.”

The GAO report found that the number of employers paying subminimum wages to people with disabilities has decreased from 3,100 in 2010 to almost 1,600 in 2019, while more people with disabilities, including those with intellectual disabilities, participate in the labor market than ever before. WHD officials and stakeholder organizations attribute the declines in subminimum wage employment to recent federal and state policies, including Senator Casey’s successful efforts to include funding for the Subminimum Wage to Competitive Integrated Employment (SWTCIE) pilot program in the FY21 federal spending bill. The program provides five-year grant awards for states to help employers transition to paying competitive, fair wages to people with disabilities. The Pennsylvania Office of Vocational Rehabilitation will receive $13 million to begin phasing out subminimum wage jobs for Pennsylvanians with disabilities as part of the program.

GAO also found that WHD’s processing times for 14(c) certificate applications and renewals varied widely, ranging from 2 days to over 2 years. Long processing times allow employers with expired certificates to continue operations without meeting program requirements. Some of these requirements include paying fair commensurate wages to workers and providing required career counseling about employment options outside of subminimum wage work, activities that can help people with disabilities earning subminimum wages to transition to competitive, integrated employment.

GAO outlined three recommendations to WHD to ensure better oversight of the 14(c) certificate program:

  1. WHD should set and track timeliness goals for intermediate steps and overall duration for processing 14(c) applications.
  2. WHD should externally communicate its goals for timely 14(c) application processing to employers and stakeholders.
  3. WHD should solicit feedback from 14(c) employers regarding the online application and take steps to address limitations and improve the overall timeliness of application processing.

Read more about the Transformation to Competitive Employment Act here link.

Read the GAO report here link.