Background

The origin story for the subminimum wage begins in 1938 at the beginning of President Franklin D. Roosevelt’s second term. During the Great Depression, hundreds of thousands of workers were laid off, and those who weren’t were subjected to worsening and unjust labor conditions, long hours, and low wages.¹ Together with U.S. Secretary of Labor Frances Perkins, the president created a new law (which Congress approved) known as the Fair Labor Standards Act (FLSA).² It had three primary goals: abolish child labor, establish regulations for overtime pay, and set a minimum wage.

During the legislation’s creation, Perkins suggested the creation of a “subminimum wage,” a lower wage adjusted to one’s productivity rate that could be used for “substandard workers.”³ By this, she was referring to “persons who by reason of illness or age or something else are not up to normal production.”⁴ As the legislation progressed, there was no consensus about how the term substandard workers should be interpreted. Some argued that people in the South were slower and less production-oriented and therefore “substandard.” Others saw this as a way to continue paying Black workers less.

In the end, the law stated that subminimum wages could be used for the employment of individuals “whose earning capacity is impaired by age or physical or mental deficiency or injury.”⁵

The intent was to encourage employers to hire individuals with disabilities if they could pay them based on their productivity rather than a standard minimum wage. At that time, the subminimum wage was envisioned as a way to create employment and training opportunities for people with disabilities, crucial at a time when many were institutionalized and excluded from education systems. This concept was written as section 14(c) of the law, and it has remained nearly unchanged since.

In practice, a subminimum wage can only be paid to disabled employees hired by entities holding a 14(c) certificate approved by the DOL. Entities maintain an active certificate for two years and then must reapply through the DOL’s website.⁶ The certificate allows entities to pay workers with disabilities below the established federal minimum wage and requires the entities to calculate a “commensurate wage” for the disabled employee based on two factors:

• the prevailing wage paid to workers without disabilities doing similar work; and
• the productivity of the worker with a disability compared with workers without disabilities.⁷

According to a January 2023 GAO report, workers paid under 14(c) certificates made an average of $4.15 per hour, with more than half being paid less than $3.50 per hour and some making less than $0.25 an hour.⁸ Today, approximately 43,000 people receive compensation under 14(c) certificates.⁹

Entities holding 14(c) certificates fall into one of four categories: school work experience programs, business establishments, hospitals and residential care facilities, and community rehabilitation programs (CRPs).¹⁰ Today, more than 90 percent of certificate holders are CRPs,¹¹ which are nonprofit organizations. The CRPs provide work to disabled employees under the 14(c) certificate for portions of the day and often provide additional day habilitation services that include activities to support personal and health care, social engagement, daily living, and community participation.¹² As it is not unusual for workers with disabilities employed under section 14(c) to work only part time, the day habilitation provides additional services for the rest of the day. The subminimum wage work and day habilitation services are typically only available in facilities that keep people with disabilities separated from non-disabled workers.¹³

Due to the segregated nature of the settings, the federal government has heavily scrutinized CRPs. In 2020, after a lengthy review, hearing, and comment period, the U.S. Commission on Civil Rights released a report¹⁴ stating that subminimum wage violates the civil rights of people with disabilities. The Department of Justice (DOJ) has been actively involved, engaging in litigation in both Oregon¹⁵ and Rhode Island.¹⁶ Under the settlements, both states no longer use subminimum wage. In October 2023, the DOJ issued guidance on employment for people with disabilities that mandates that state and local governments are to provide employment services in the most integrated setting.¹⁷

The primary proponents of maintaining the subminimum wage are families of older adults who have been employed under 14(c) certificates for many years, sometimes decades. Many aging individuals with disabilities did not grow up with the ADA and were not afforded the same opportunities as disabled youth today. A lack of inclusive schools, workforce training, and job opportunities with accommodations created a situation where taking a subminimum wage job was often the only choice. Thus, some families push to maintain the subminimum wage, not to keep low wages but to support and maintain the employment of their loved ones.

Youth and adults with disabilities under 30 have grown up with the ADA, which has meant more inclusive education, opportunities in higher education, workforce training, and self-advocacy training to seek accommodations. Only a small percentage of young people participate in today’s programs that pay a subminimum wage, despite disability type.¹⁸ Advocates for eliminating the subminimum wage include individuals with disabilities who have transitioned out of subminimum wage work, individuals in states and employed by companies that have transitioned away from subminimum wage, and larger employers and corporate entities.

The movement to eliminate subminimum wage is gaining steam. The DOJ continues to challenge the policy;¹⁹ federal government reports with startling data have been piling up;²⁰ and the oversight agency, DOL, is conducting a comprehensive review.²¹ Put simply, the subminimum wage is at odds with the direction of disability policy now and the goals of the ADA, which are to achieve equal opportunity and economic self-sufficiency.