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

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.

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

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 Outcomes before and after subminimum wage law repeal in 2 states (New Hampshire and Maryland) that repealed Section 14(c) were compared with a synthetic group of control states that did not implement repeal.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.

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

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.

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.

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.