The national debate continues over a practice established by an 86-year-old federal statute that permits companies to pay workers with disabilities subminimum wages, defined as anything below the federal minimum wage of $7.25 an hour, with some receiving as little as 25 cents per hour. Advocates for repealing this statute argue that it is based on outdated assumptions about reduced productivity. It highlights the unfairness of this wage level, typically used to compensate food service workers who often earn additional income through tips. Opponents of the repeal, however, express concerns that eliminating subminimum wage laws could lead to fewer employment opportunities for workers with disabilities.

Recently, a study conducted by researchers at the University of Pennsylvania Perelman School of Medicine found that repealing these subminimum wage practices has not led to significant negative impacts in states that have abandoned them. Published today in JAMA Health Forum, the study offers critical insights for policymakers as a new Congress convenes.

The research focused on Maryland and New Hampshire, two states that have phased out the subminimum wage practice initially introduced in 1938 under the Fair Labor Standards Act (FLSA). The act was intended to encourage businesses to hire disabled soldiers, who were presumed to be less productive in the mainstream workforce. Employers who wish to pay subminimum wages to people with disabilities must obtain a 14c certificate from the Department of Labor (DOL). This often occurs within sheltered workshops, where employees with intellectual and psychiatric disabilities are frequently segregated from their non-disabled colleagues.

The study observed increased labour force participation among people with cognitive disabilities in these states following the law’s repeal, with the effects varying by state.

Atheendar Venkataramani, MD, PhD, an associate professor of Health Policy and Medicine and the study’s senior author, noted, “Employment and wages are significant determinants of health. This research builds upon previous studies which demonstrated that employment and financial stability are key factors in reducing health disparities among people with disabilities. Further, studies have shown that integrated employment is linked with improved psychological well-being, self-esteem, and job satisfaction for people with intellectual disabilities.”

The study found that labour force participation increased in both states after the repeal, highlighting the inclusive nature of this change. It suggests that individuals with cognitive disabilities, previously disconnected from employment resources, are now engaging in the workforce in equal-paying, fully integrated roles alongside their non-disabled peers, a scenario previously considered unfeasible when the law was first drafted. Mihir Kakara, MBBS, MSHP, the study’s lead author and a former Neurology fellow at Penn, now an assistant professor of Neurology at NYU Grossman School of Medicine, emphasized the importance of providing the right resources to facilitate this integration.

The research team also highlighted the need for tailored solutions at the state level should the use of 14c roles be repealed nationally, including the importance of funding for integrated employment in more typical workplace environments. These findings provide a preliminary glimpse into a future where workplace dignity is approached differently, ensuring a net economic benefit and more significant equity in employment.

The fate of this practice is expected to become more apparent soon, as a bipartisan bill to phase out subminimum wage roles and create more inclusive job opportunities was introduced in the previous Congress. Additionally, the Biden Administration is reviewing the 14c program comprehensively, with a decision expected soon.

More information: Mihir Kakara et al, Repeal of Subminimum Wages and Social Determinants of Health Among People With Disabilities, JAMA Health Forum. DOI: 10.1001/jamahealthforum.2024.4034

Journal information: JAMA Health Forum Provided by University of Pennsylvania School of Medicine