Momentum to Change the Subminimum Wage

A growing number of states and the federal government are decreasing the use of section 14(c), eliminating it altogether, and increasing competitive integrated employment opportunities for disabled people. This trend has been developing for the last decade but has picked up speed in the last six years.

Across all states, use of the subminimum wage has been steadily decreasing for nearly a decade. In 2015, New Hampshire became the first state to eliminate the subminimum wage through legislation when it passed Senate Bill 47, repealing the authorization for subminimum wage. Between 2018 and 2023, the number of workers employed under section 14(c) across all states shrank from approximately 130,000 to 43,000. Today, 10 states have fully eliminated subminimum wage in a codified way, two have eliminated it without any legislation or official policy action, and five are actively phasing it out.

This shift is exemplified by Melwood,¹ one of the largest employers of people with disabilities in the country, which eliminated the use of subminimum wage in 2013 and relinquished its 14(c) certificate in 2016. It has successfully transitioned to paying employees with disabilities competitive wages in more integrated settings in Maryland, Virginia, and DC.

States have also increasingly adopted the Employment First² model, a national framework for changing employment systems to support disabled people in the workforce with real jobs and real wages.³ Employment First is based on the idea that all people, including those with disabilities that require high levels of support, should be employed in the general workforce. States have engaged with Employment First initiatives in different ways, including legislation, executive orders, agency administration directives or policy, and proclamations.

The federal landscape is also changing. Since its enactment in 2014, the Workforce Innovation and Opportunity Act (WIOA) has played a pivotal role in the shift from subminimum wage employment to competitive integrated employment for youth through two key provisions. First, WIOA mandated that vocational rehabilitation (VR) agencies allocate at least 15 percent of federal funds for pre-employment transition services⁴ to youth with disabilities. This stipulation prioritized early support for students with disabilities, providing a range of activities such as job exploration counseling, work-based learning experiences, and self-advocacy training. Second, WIOA’s Section 511 imposed limitations on subminimum wage employment, encouraging a move toward competitive integrated employment for youth with disabilities.

Ongoing federal legislative efforts reflect a commitment to end subminimum wage. Most notably, the bipartisan and bicameral Transformation to Competitive Integrated Employment Act was re-introduced in February 2023 by Senator Bob Casey (D-Pa.), Representative Bobby Scott (D-Va.), Senator Steve Daines (R-Mont.), and Representative Cathy McMorris Rodgers (R-Wash.).⁵ It aims to prohibit new 14(c) certificates, phase out existing certificates over a five-year period, and provide crucial support through grants for business and program model transformation. In addition, the federal U.S. AbilityOne Commission, which administers AbilityOne employment programs across the country serving people who are blind or have other severe disabilities, ended subminimum wage for all its contracts in 2022. “While payment of subminimum wages has been declining in the program for years,” the announcement read, “it is past time to ensure that all employees are fairly compensated for their work.”⁶ That same year, multiple agencies⁷ co-released guidance to support state and local efforts for blending, braiding, and sequencing funding to further expand competitive integrated employment options.

The federally mandated Vocational Rehabilitation (VR) program plays a central and crucial role in supporting disabled workers on their path to employment and economic self-sufficiency. Operating through state agencies, VR provides a range of services, including counseling, training, and job placement, with the goal of facilitating competitive integrated employment for disabled workers. The Disability Innovation Fund (DIF), a competitive grant program funded with unspent VR money managed by the U.S. Department of Education, supports creative approaches within the VR framework. Beginning in 2021, states have had the opportunity to apply for three rounds of funding to support projects that advance career pathways through apprenticeships, assist individuals transitioning from subminimum wage to competitive integrated employment, and pilot cohesive service delivery models for youth with disabilities. By encouraging innovative approaches, the DIF contributes to the ongoing evolution and improvement of VR services across the United States.

Many other programs influence employment opportunities and outcomes for disabled workers, though they may not always appear to target employment specifically. Medicaid expansion, benefits counseling, and tax-deferred savings accounts have positive ripple effects on employment for disabled people. States are taking advantage of these programs by expanding services and offering more programs to increase employment opportunities for disabled workers.

Medicaid is a critical program providing health care, home care services, and more for people with disabilities. Medicaid may also provide personal care attendants, enabling individuals to not only get ready for work but be supported at work. Medicaid may also provide funding for work-based services such as supported employment⁸ and community-integration supports to enable disabled workers to obtain competitive integrated employment.⁹ Medicaid expansion, which is still controversial in a few states, is crucial for these services as it is through home and community-based services under the Medicaid waivers that the services are provided.

Many disabled workers struggle with earnings and savings, especially during a transition from an older program paying a subminimum wage to competitive integrated employment. Benefits counseling programs are designed to alleviate concerns about the impact of potential earnings on their existing benefits and to encourage individuals to enter the workforce without fear of losing essential supports such as Supplemental Security Income, housing assistance, food assistance, and Medicaid. Benefits counseling programs match individuals with a benefits counselor who helps them and their families address fears and concerns.¹⁰ Part of benefits counseling may include opening an ABLE account, a tax-advantaged savings account for people with disabilities,¹¹ to further encourage and support savings. Benefits counseling may also assist individuals navigate the transition to new supports as they earn a higher income in employment.

In short, enabling people with disabilities to benefit from meaningful employment and fair wages will require more than just eliminating the subminimum wage. To get a fuller picture of states’ progress, we identified, in this report, how programs like these are developing across all states.