On March 18, the U.S. Department of Education announced funding for a historic demonstration project focused on moving disabled workers out of subminimum wage jobs. The project—the Subminimum Wage to Competitive Integrated Employment (SWTCIE)—is laudable because it is the first federal investment in removing the antiquated, discriminatory subminimum wage for workers with disabilities and instead supporting them in moving to competitive, integrated employment.
During my time working with two members of Congress dedicated to improving wages for workers with disabilities, as well as in the administration, working for President Biden, who also committed to eliminating the subminimum wage, I had the chance to see the evolution of this bipartisan policy and whole-of-government approach focusing on the economic success of disabled workers. The investment that SWTCIE makes comes at an important moment, as more than thirteen states having recently eliminated or are in the process of phasing out the subminimum wage. The funding contained in SWTCIE is a big step toward advancing economic security for the tens of thousands of disabled Americans being paid pennies an hour for their labor.
What is historic about this moment is not only the funding represented in SWTCIE, but the whole-of-government approach. For the first time, the White House, Congress, and multiple agencies are coming together in a unified, bipartisan effort to end a discriminatory practice and help disabled workers achieve economic security.
The practice of paying a subminimum wage to workers with disabilities has existed in law since 1938. Section 14(c) of the Fair Labor Standards Act (FLSA) is a provision that enables employers to apply for a certificate that would allow them to pay disabled workers a wage lower than the minimum wage. The U.S. Department of Labor reviews these applications and is responsible for approving or denying these certificates.
It is difficult to assess how many workers with disabilities right now are receiving a subminimum wage, or what that wage is. Approximately 1,200 employers currently have, or have applied for, a 14(c) certificate. Nearly 45 percent of the certificates are pending, however, meaning that the Department of Labor does not report the number of workers with disabilities currently working for those employers, because they are in the process of review. Thus, the number of workers nationally being paid these low wages is difficult to grasp, although estimates currently suggest that it is between 40,000 and 100,000. Further demographic information about these workers is relatively unknown, except through anecdotal reports, given how data is collected. Even data on the average wage these workers receive is not collected. However, a report from the U.S. Commission on Civil Rights in 2019 found average wages could be about $3.34 an hour.
The current situation of subminimum wages—low wages, inadequate data collection, and even the slow certificate processing—seems to indicate that the government approach to disabled workers paid these discriminatory wages is severely inadequate, almost an afterthought. This deficit in robust attention and policy action is perhaps best summed up by David Kladney, a commissioner on the U.S. Commission on Civil Rights: “Is 14(c) […] simply something for people with disabilities to do during the day in a society that doesn’t really value their potential contributions, operating only to exclude and make them invisible to society?”
Recent Action at the Federal Level
The move to elevate the wages of workers with disabilities has bipartisan champions in Congress. Representative Bobby Scott (D-VA), Representative Cathy McMorris Rodgers (R-WA), Senator Bob Casey (D-PA), and Senator Steve Daines (R-MT) agree that the subminimum wage is a loophole in need of correction and have worked diligently on writing and introducing legislation. In 2019, the bipartisan Transformation to Competitive Employment Act was introduced in the House of Representatives, and updated and introduced in the Senate in 2021 as the Transformation to Competitive Integrated Employment Act. The bill is actually the second to set a path toward elimination of subminimum wage, following in the footsteps of the Raise the Wage Act, which would have not only phased out the 14(c) loophole, but also increased the minimum wage to $15. Unique to the Transformation bill, however, is the considerable funding proposed to invest in competitive integrated employment.
Bipartisan momentum has continued to grow around phasing out subminimum wage, with both 2020 party platforms committing to eliminating 14(c). With what appeared to be a tipping point nearing for movement on subminimum wage, Congressional members recognized the need for an investment in competitive integrated employment sooner than later, though legislative action was unlikely at the end of 2020. Thus, in the 2021 appropriations omnibus, a provision was included to create the Disability Innovation Fund (DIF) at the Rehabilitative Services Administration (RSA) at the Department of Education. The DIF uses funds returned from state Vocational Rehabilitation agencies to create competitive grants focused on reducing the use of subminimum wage. The SWTCIE demonstration project announced March 18 is currently funded with $167 million in DIF grants, and the program is focused on advancing economic security for disabled Americans.
The Department of Labor also began a trajectory of critical work focused on advancing competitive integrated employment. On March 22, they held a webinar on blending, braiding, and sequencing funding to advance employment, equity, and inclusion. Led by Assistant Secretary Taryn Williams, the Office of Disability Employment Policy is setting the agenda for critical conversations on how to make competitive integrated employment successful at the federal, state, and local levels. As I was able to have an inside look from my previous role on the Domestic Policy Council, there are significant and meaningful partnerships between agencies such as Department of Labor, Department of Health and Human Services (HHS), Social Security Administration (SSA), AbilityOne, and Department of Education as they engage in interagency collaborative work. For the first time in years, competitive integrated employment is a real policy conversation and commitment across the federal government at the highest levels.
This movement to provide workers with disabilities better wages in order to give them more economic security is not only good for the workers themselves, but also good for businesses and the economy as a whole. Workers with disabilities paid a subminimum wage may be earning as little as $300 a month or less, removing any ability for them to genuinely engage in the types of activities that benefit the economy—enjoying social gatherings with friends at local venues, engaging meaningfully in their communities, and supporting local businesses as customers. Raising wages enables disabled Americans to not only have the dignity of work, but the dignity of a real paycheck. Ending subminimum wage and employing more people with disabilities in the competitive, integrated U.S. labor market is good for the country; one study suggests the GDP could get a $25 billion boost or more, if just 1 percent more disabled individuals were hired into the labor force.
More than thirty-one years ago, Congress made the promise of economic security to people with disabilities through the Americans with Disabilities Act. The historic investment in ending the subminimum wage contained in SWTCIE—and the ongoing work by federal agencies—represents a significant step toward making that goal a reality.