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The labor market effects of subminimum wage elimination: Evidence from a national analysis

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  • Yin, Michelle
  • Seo, Regina
  • Vu, Hoa

Abstract

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.

Suggested Citation

  • Yin, Michelle & Seo, Regina & Vu, Hoa, 2026. "The labor market effects of subminimum wage elimination: Evidence from a national analysis," Labour Economics, Elsevier, vol. 100(C).
    • Handle: RePEc:eee:labeco:v:100:y:2026:i:c:s0927537126000357
    DOI: 10.1016/j.labeco.2026.102884
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    Keywords

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    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • J79 - Labor and Demographic Economics - - Labor Discrimination - - - Other

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