Workers with a disability can make less than $7.25 an hour. UPenn research sheds light on what ending that practice has meant in some states.
The U.S. Department of Labor has proposed a rule that would bring an end to the program nationally. Researchers examined the states of Maryland and New Hampshire that have already repealed it.
Since 1938, some employers have been allowed to pay workers with disabilities less than the federal minimum wage, currently $7.25 per hour. But that could soon come to an end.
This month, the U.S. Department of Labor announced a proposed rule that would phase out the program that has allowed this practice. Sen. Bob Casey (D., Pa.) has been a proponent of ending the practice, and introduced bi-partisan legislation to transition away from it last year.
While the Labor Department is expected to hear comments for the proposed rule through Jan. 17, a study out of the University of Pennsylvania Perelman School of Medicine provides insight on what repealing the statute could look like.
A shrinking popularity of the program
The practice of paying people with disabilities less than the federal minimum wage is allowed under Section 14(c) of the Fair Labor Standards Act, for companies that earn a certificate to do so. It was originally intended to create more job opportunities for workers with disabilities.
The program has declined in popularity. While 296,000 workers were employed through it in 2010, that number dropped to 122,000 in 2019, The New York Times reported. As of May, it was roughly 40,000.
Some see the program as unnecessary because training and other resources are more available to workers and employers than they once were. Others have said that the practice is discriminatory.
More than half of the people employed via Section 14(c) certificates have made less than $3.50 an hour since 2019, according to The New York Times.
Acting Secretary of Labor Julie Su said in a statement that the Labor Department expects that with the rule change, these workers “will move into jobs that pay full wages, which will improve their economic wellbeing and strengthen inclusion for people with disabilities in the workforce.”
Several states have already repealed the practice of paying subminimum wages locally, including Alaska, Oregon, and California. Yet, proponents of the program, including parents of people with disabilities, caution that ending it could reduce work opportunities for this group.
The potential to affect those outside the workforce
To gain more insight on how repealing the practice has affected workers in states that have already ended it, Penn researchers looked at U.S. Census Bureau data for two states: Maryland and New Hampshire. Specifically, they looked at people with intellectual and developmental disabilities.
Labor force participation grew in both states.
“It might actually bring in folks who are outside the labor force,” said Mihir Kakara, who worked on the study as a fellow at Penn and now is an assistant professor of neurology at NYU Langone Health.
But other state-specific factors could also be playing a role, the report indicates. While the increases in employment and labor force participation in New Hampshire were statistically significant, the study said, in Maryland they were not.
“Based on our results, we feel that eliminating this law will likely not have an adverse impact on the employment rates, but [more may be needed] to actually increase the rate of employment,” said Kakara.
Another important question to study, Kakara says is how repealing this program will affect the health outcomes of workers with disabilities. They have higher rates of chronic health conditions than those without disabilities, and are less likely to get preventive care, the report highlights.
“Because of the lower income that they might be on, they may not have access to health care,” Kakara explained. ”We right now do not know how it might look like with higher wages.”