Key facts
- A bipartisan bill to end subminimum wages for workers with disabilities is currently in Congress.
- New peer-reviewed research published in Labour Economics indicates that ending subminimum wages does not lead to significant job losses for workers with disabilities.
- In states that have ended subminimum wages, overall employment for workers with disabilities remained steady, with employment rates and hours worked holding at pre-policy levels.
- Welfare dependence among workers with disabilities decreased by 12.4 percent after states ended subminimum wages, with this effect growing over subsequent years.
- Vocational rehabilitation services, which support the transition to competitive employment, generate substantial returns on investment and increase employment rates.
- The proposed Transformation to Competitive Integrated Employment Act includes a six-year phase-out period and dedicated federal transition funding.
A bipartisan bill aimed at ending subminimum wages for workers with disabilities is currently before Congress, drawing support from across the political spectrum. Opponents have historically argued that eliminating this practice would lead to job losses for individuals with disabilities. However, new peer-reviewed research published in Labour Economics challenges this assertion, analyzing data from 15 states that have already phased out subminimum wages.
The study found that while employment in sheltered workshops decreased, overall employment for workers with disabilities remained stable. Employment rates, hours worked, and competitive job placements were unaffected in the states examined, even in the second and third years following policy changes. The research also revealed a significant fiscal benefit: welfare dependence among workers with disabilities dropped by 12.4 percent, with this effect strengthening over time as individuals moved into the tax base.
This fiscal case is further bolstered by existing data on vocational rehabilitation services, which support the transition to competitive employment. These services have been shown to generate substantial returns on investment, increase earnings, and improve employment rates. Virginia's phased approach, aiming for full elimination by 2030 with federal grant support, serves as a practical example of a well-designed transition.
Nationally, enrollment in subminimum wage programs has declined significantly, from approximately 220,000 workers in 2016 to about 40,000 in 2024. A Government Accountability Office report noted that a substantial portion of remaining workers earn very low wages. The proposed Transformation to Competitive Integrated Employment Act seeks to facilitate this transition by pairing a six-year phase-out with dedicated federal funding, building on the successes observed in states that have already enacted similar reforms.