Does Eliminating the Subminimum Wage for Workers with Disabilities Improve Labor Force Outcomes? Empirical Evidence from the United States

Section 14(c) of the Fair Labor Standards Act allows for workers with disabilities in the United States to be paid below the federal minimum wage. In recent years, several states have banned the use of 14(c) certificates. Using Current Population Survey data and staggered difference-in-difference approaches, we estimate the effect of policies banning subminimum wages on various labor market outcomes for people with disabilities. Ultimately, we find very little effects in terms of labor force participation rate, poverty rates, wages, and hours but we do find that banning 14(c) certificates seems to increase instances of unemployment among workers with disabilities. However, our findings highlight a significant measurement mismatch between national household surveys and the specific subpopulation affected by 14(c) certificates. These results underscore the limitations of using the Current Population Survey to evaluate targeted disability labor policies, as treatment effects are likely diluted within a broad, population-level definition of disability.