GAO Issues Report on Subminimum Wage

On February 24, the Government Accountability Office (GAO) issued a report looking at the 14(c) certificate program, which allows select employers to pay people with disabilities below minimum wage. Findings from the survey of 14(c) certificate data, as well as interviews with employers holding 14(c) certificates, reveal that the use of 14(c) certificates has declined over the last decade.  

The survey found that from 2010 to 2019, employer participation in the 14(c) program decreased by about half and the number of 14(c) workers also fell—from about 296,000 to 122,000. This decline can be attributed in large part to federal and state policies restricting the payment of wages below the federal minimum, and it can also be attributed to changing attitudes. Many employers reported that they ended their subminimum wage programs voluntarily.  

Some of the policy changes cited by employers surveyed include: 

• The passage of the Workforce Innovation and Opportunity Act (WIOA) in 2014, which limited the payment of subminimum wages by requiring individuals with disabilities below age 25 to first receive pre-employment transition services such as job exploration counseling 
• The announcement in 2019 that the AbilityOne Program would eliminate payment of subminimum wages on all its contracts within three years 
• Laws passed in multiples states to phase out 14(c) employment or prohibit the payment of subminimum wages 
• The impact of the Individuals with Disabilities Education Act (IDEA), which has increased opportunities for people with disabilities to receive education in integrated settings and may have influenced some to seek competitive employment  

The report analyzed trends among 14(c) employment. It noted that between August 2019 and December 2021, more than 50% of workers in 14(c) programs earned less than $3.50 per hour, and only about 14% earned the federal minimum wage of $7.25 or more. Employer surveys also revealed that most 14(c) workers in August 2021 had an intellectual or developmental disability and were white. Additionally, almost all 14(c) workers worked less than 35 hours a week, with a roughly even distribution of workers across the following categories: working 1 to 10 hours, 11 to 20 hours, and 21 to 34 hours per week. 

For more from the GAO report, view the full report or the highlights page.