Michelle Yin, Regina Seo, Hoa Vu, The labor market effects of subminimum wage elimination: Evidence from a national analysis, Labour Economics, Volume 100, 2026, 102884, ISSN 0927-5371, https://doi.org/10.1016/j.labeco.2026.102884.
HighlightsAbstract
- First national quasi-experimental analysis of subminimum wage elimination for PWD.
- Elimination reduced 14(c) employment by around 2000 workers per state within two years.
- No significant reductions in overall employment, hours worked, or wages for PWD.
- Reduced welfare receipt suggests elimination promotes economic self-sufficiency.
- Results support federal phase-out of Section 14(c) without adverse employment effects.
This study examines the labor market effects of eliminating Section 14(c) subminimum wage employment laws for people with disabilities in the United States. We construct a novel panel dataset combining the universe of Department of Labor Section 14(c) administrative records (2015–2024) with individual-level data from the Current Population Survey (2009–2024). Exploiting the staggered elimination of Section 14(c) across fifteen states, we employ event-study and difference-in-differences designs to identify dynamic treatment effects. We find that elimination policies reduce formal subminimum wage employment by approximately 2000 workers per state within two years. Importantly, we find no statistically significant reductions in overall employment rates, competitive integrated employment, or hours worked among workers with disabilities. Estimates suggest economically meaningful reductions in welfare income receipt. These findings indicate that subminimum wage abolition achieves its intended policy objective by eliminating formal sheltered employment without imposing the adverse employment effects that critics of minimum wage policies predict. Our results inform ongoing federal deliberations over phasing out the Section 14(c) program.
