Repeal of Subminimum Wages and Social Determinants of Health Among People With Disabilities
OFH Contributors
Key Takeaways
Repeal Section 14(c) of the Fair Labor Standards Act – a law that made legal subminimum wages for workers with cognitive disabilities – in New Hampshire and Maryland led to employment outcomes for people with cognitive disabilities in states that eliminated Section 14(c) of the Fair Labor Standards Act.
Effects varied by state. While New Hampshire saw statistically significant gains in employment and labor force participation, Maryland’s employment increases were smaller and not statistically significant, suggesting that state-level factors influence the impact of repeal policies.
Overall, eliminating subminimum wage policies may boost economic opportunity for people with disabilities, though more research is needed.
Executive Summary
Introduction
People with disabilities in the U.S. face significant socioeconomic and health challenges driven in part by barriers to employment. One long-standing contributor to limited economic opportunity has been Section 14(c) of the Fair Labor Standards Act, a policy that allows employers to pay individuals with cognitive and intellectual disabilities subminimum wages. Despite its controversial nature and ongoing policy debates at state and federal levels, the impacts of repealing this policy on employment outcomes and broader social determinants of health have not been rigorously evaluated. This study assesses how the repeal of Section 14(c) in New Hampshire (2015) and Maryland (2016) affected labor force participation and employment among adults aged 18–45 with cognitive disabilities.
Main Findings
- Eliminating subminimum wage policies was associated with higher labor force participation (4.7 percentage points) among adults with cognitive disabilities in New Hampshire and Maryland, indicating greater engagement with the labor market following repeal.
- In state-specific analysis, New Hampshire experienced a significant 7 percentage point increase in employment after repeal, while Maryland saw smaller increases.
- The repeal was not associated with meaningful changes in wages earned, hours worked, or the likelihood of earning at or above the minimum wage during the study period. Overall, the data yield little evidence of meaningful reductions in labor force participation or employment as a result of the policy.
Conclusion
The repeal of subminimum wage provisions under Section 14(c) was generally linked to greater labor market participation for people with cognitive disabilities, though outcomes varied across states. By removing a legal framework that permits lower pay based on disability status, repeal may also support dignity, social integration, and improved social determinants of health tied to employment.
At the same time, the findings highlight important trade-offs and implementation challenges. Some individuals and service providers may face transitional disruptions if supportive employment programs are not adequately expanded or funded to replace subminimum wage settings.
Our results suggest that repealing subminimum wage policies can produce positive effects on labor market outcomes, but success depends on complementary investments. Policymakers considering repeal should weigh both the benefits and the need for robust supports to ensure that people with disabilities can access stable, fairly compensated work.