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Tight Job Market May Yield Higher Pay for Workers With Disabilities

By Glenn Jacoby  |  February 16, 2022

American industries need employees. With nearly 11 million unfilled jobs but only 6.5 million unemployed workers, many employers are offering increased flexibility and higher wages to attract job applicants.

But the gulf between job openings and unemployed workers remains a top concern for states. Policymakers are looking for creative ways to bring underutilized groups into the labor force, especially people with disabilities.

 A clear policy trend is emerging: the elimination of subminimum wages.

Section 14(c) of the federal Fair Standards Act allows employers to pay people with disabilities a subminimum wage if their disability reduces their production capacity. Over 67,000 workers with disabilities are currently making subminimum wages.

The long-term impacts of eliminating subminimum wages are still unclear. While many see subminimum wages as unfair treatment of people with disabilities, others worry that eliminating them will decrease the number of job opportunities for those with more severe disabilities.

However, as states increasingly shift toward competitive integrated employment—people with disabilities working alongside people without disabilities—many are taking steps to end the payment of subminimum wages.

Prior to the 2021 session, eight states had eliminated the subminimum wage:

  • The Alaska Department of Labor and Workforce Development adopted regulations in 2018.
  • Maine enacted LD 1874 in 2020.
  • Maryland enacted HB 420 in 2016.
  • Nevada enacted AB456 in 2019.
  • New Hampshire enacted SB 47 in 2015.
  • Oregon enacted SB494 in 2019.
  • Texas enacted SB 753 in 2019.
  • Washington enacted HB 1706 in 2019.

That number nearly doubled in 2021. Seven additional states enacted legislation or executive orders eliminating the subminimum wage:

In addition to these, seven other states currently have bills pending to eliminate or modify the payment of subminimum wages:

This trend will likely continue in the 2022 legislative session. As states act to better integrate workers with disabilities into the labor force, competitive wages will be a key topic for consideration.

Glenn Jacoby is a policy analyst in NCSL’s Employment, Labor and Retirement Program.

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