Repeal of Subminimum Wages and Social Determinants of Health Among People With Disabilities.

Abstract

Importance: People with disabilities experience pervasive health disparities driven by adverse social determinants of health, such as unemployment. Section 14(c) of the 1938 Fair Labor Standards Act has been a controversial policy that allows people with disabilities to be paid below the prevailing minimum wage, but its impact on employment remains unknown despite ongoing national debates about its repeal.

Objective: To estimate whether state-level repeal of Section 14(c) was associated with employment-related outcomes for people with cognitive disability.

Design, setting, and participants: This quasi-experimental, synthetic difference-in-differences study used individual-level data from the 2010-2019 American Community Surveys. Outcomes before and after subminimum wage law repeal in 2 states (New Hampshire and Maryland) that repealed Section 14(c) were compared with a synthetic group of control states that did not implement repeal. Individuals aged 18 to 45 years who reported having a cognitive disability were included. Data were analyzed from May 2023 to May 2024.

Exposure: Repeal of Section 14(c) in New Hampshire (2015) and Maryland (2016).

Main outcomes and measures: Primary outcomes were labor force participation and employment rates. Secondary outcomes were annual wages, annual hours worked, hourly wages, and proportion earning above state minimum wage among employed individuals.

Results: The sample included 450 838 individuals. Of these, 253 157 (55.7%) were male, and the mean (SD) age was 31.3 (8.4) years. In state-specific analyses, New Hampshire's labor force participation and employment had a statistically significant increase by 5.2 percentage points (β = 0.05; 95% CI, 0-0.10; P = .04) and 7 percentage points (β = 0.07; 95% CI, 0.01-0.13; P = .03), respectively, following Section 14(c) repeal. Labor force participation and employment both increased in Maryland, although estimates were not statistically significant. Pooling both states, Section 14(c) repeal was associated with a statistically significant 4.7-percentage point (β = 0.05; 95% CI, 0.01-0.08; P = .01) increase in labor force participation and a nonsignificant 4.3-percentage point (β = 0.04; 95% CI, 0-0.09; P = .07) increase in employment.

Conclusions and relevance: In this study, repeal of Section 14(c), a policy allowing subminimum wages for people with disabilities, led to increases in labor force participation, though with heterogeneity at the state level. These findings suggest the importance of state-level factors in shaping program effects, especially as national-level Section 14(c) repeal is being debated.