As federal officials consider ending a program that allows employers to pay people with disabilities less than minimum wage, a new study suggests that doing so has little downside.
In what is believed to be a first-of-its-kind study, researchers examined the fallout in two states that did away with what’s known as subminimum wage employment.
Under an 86-year-old law, employers can obtain so-called Section 14(c) certificates from the U.S. Department of Labor allowing them to pay people with disabilities less than the federal minimum of $7.25 per hour. As a result, some workers earn just pennies per hour.
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The practice has come under fire in recent years with disability advocates arguing that it opens the door to exploitation and limits community engagement. As a result, at least 15 states have passed laws to phase out subminimum wage and the Labor Department proposed this month to end the program nationally.
For the new study published in the journal JAMA Health Forum, researchers looked at what happened in New Hampshire, which passed legislation in 2015 to do away with subminimum wage employment, and Maryland, which approved a phaseout of the program in 2016.
Using data collected through the U.S. Census Bureau’s American Community Survey between 2010 and 2019, the study assessed how the experiences of people with cognitive disabilities ages 18 to 45 changed once subminimum wage ended in their state.
Both states saw increases in employment and labor force participation — or the portion of the population that is employed or looking for work — after the repeal of Section 14(c), but to different degrees. The researchers said that the findings may have been more pronounced in New Hampshire due to greater investment in integrated employment training for people with developmental disabilities following the repeal, different industries employing these workers or other state-specific factors.
Also, the study notes that Maryland’s 2016 law triggered a four-year phaseout of subminimum wage employment while New Hampshire had no workers with disabilities earning less than minimum wage in 2015 when that state banned the practice. The fact that New Hampshire saw leaps in labor force participation and employment nonetheless suggests that the policy change alone can be meaningful, researchers said, with media coverage and debate about Section 14(c) likely spurring people with developmental disabilities to seek out employment training opportunities.
The findings show the “inclusive nature of repeal, as it brings people with cognitive disabilities previously not connected with employment resources into the labor force,” said Mihir Kakara, the study’s lead author and an assistant professor of neurology at New York University’s Grossman School of Medicine. “This points towards the fact that these people are able to work in equal paying, fully integrated jobs as their peers who do not have a disability, given the right resources — something that was perceived not to be the case when this law was first drafted.”
Even with the variation seen among states, the researchers said it was notable that they did not uncover any negative effects on people with developmental disabilities, though they acknowledged that such impacts for certain subpopulations could not be ruled out.
“These findings suggest the importance of state-level factors in shaping program effects, especially as national-level Section 14(c) repeal is being debated,” the authors concluded.
