More than a dozen states have moved in recent years to stop employers from paying workers with disabilities less than minimum wage. Now, it’s starting to become clear how that decision is playing out on the ground.
A first-of-its-kind analysis finds that eliminating what’s known as subminimum wage employment does not lead to a significant drop in the number of people with disabilities who are employed, the hours they work or their wages.
Within two years, subminimum wage employment fell by about 2,000 workers per state, according to findings published in the June issue of the journal Labour Economics. At the same time, income from government welfare programs declined by more than 12%.
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“The biggest takeaway from our study is that the employment fears that have kept section 14(c) in place at the federal level are not supported by the national data,” said Michelle Yin, an economist at Northwestern University who led the study. “The policy does exactly what it is designed to do, that is sheltered workshop employment falls, … but workers do not disappear from the labor force. They remain employed, and by different measures, they become more economically self-sufficient.”
The study offers a new look at a practice that has persisted for nearly a century. Under a federal law dating back to 1938, employers can obtain special 14(c) certificates from the U.S. Department of Labor allowing them to pay workers with disabilities less than the federal minimum of $7.25 per hour.
Since 2015, however, 17 states have enacted legislation eliminating 14(c) certificates, according to the Association of People Supporting Employment First. The Biden administration sought to take things a step further by ending the program nationally. In 2024, the Labor Department proposed plans to stop issuing new certificates and phase out 14(c) over three years.
Now, the winds appear to be shifting. The Trump administration withdrew the Labor Department plan last year and the House Committee on Education and Workforce advanced a bill in May designed to make it easier for young adults with disabilities to enter 14(c) employment.
For the study, Yin and her colleagues looked at administrative data from the Department of Labor and the Census Bureau’s Current Population Survey from 2009 to 2024 on 15 states that eliminated subminimum wage employment. Each state ended subminimum wage on a different timetable, but notably, the patterns the researchers observed were remarkably similar across states no matter their size or political leanings.
However, Yin admits that the outcomes aren’t entirely rosy for everyone.
“The aggregate results likely reflect two groups moving in different directions,” she said. “Workers with higher productivity and more labor market experience appear to find competitive employment. Workers with the most significant disabilities and the least experience outside sheltered settings may exit employment rather than transition. The averages look encouraging, but averages can mask who gets left behind.”
That’s where the approach a particular state took matters, Yin said. In states that prioritized supported employment, job coaching and vocational rehabilitation alongside eliminating subminimum wage, individuals were more like to transition to new employment, while states that neglected to build such infrastructure left some workers without appropriate options.
Still, Yin says the findings broadly support moving away from subminimum wage.
“The feared employment collapse has not materialized in any of the 15 states we studied,” she said. “The transition from subminimum wage to competitive employment pays for itself when the investment is in place.”
But Hugo Dwyer, executive director of VOR, which supports the availability of subminimum wage employment, said the numbers don’t tell the whole story.
“We need to somehow look at the human side, and measure satisfaction and the opportunity for personal growth,” he said, adding that it’s important for individuals with disabilities to have choices.
“No one has to work in a sheltered workshop if they don’t want to,” Dwyer noted. “But they are right for a certain cohort of individuals who have a combination of skills that exceed those exercised in day programs and challenges that make it difficult for even the most patient employer to accommodate them.”
