People with disabilities have lower rates of labor force participation and employment and significantly lower average incomes and wages than those without disabilities. These disparities arise from, among other factors, the impact of disabilities on productivity, barriers to employment (such as lack of transportation or training), costs associated with accommodations, discrimination in the labor market, and the possibility that health limitations render work infeasible. Our research explores whether the challenges faced by people with disabilities cause minimum wage laws to differentially impact this group, which accounts for roughly 12 percent of the population between the ages of 22 and 54.

Prior research has considered the effects of minimum wages on the industries and demographic groups that account for a plurality of minimum wage workers. But there is little evidence of the impact of minimum wages on people with disabilities. Concerns about the potential negative effects of minimum wages on this group’s employment have motivated exemptions for disabled workers, though the use of these exemptions is uncommon. In fact, in December 2024, the Department of Labor proposed a rule to eliminate this exemption. Additionally, people with disabilities were more likely to be beneficiaries of income support programs; our data indicate that people with disabilities received public assistance at a rate six times higher than the nondisabled. Therefore, changes in employment and wages for people with disabilities may directly affect tax revenues and government spending.

Our research analyzes the effects of minimum wage increases on employment, labor force participation, and participation in income support programs for people with severe and nonsevere disabilities. Our analysis uses data from the American Community Survey and focuses on the 2010s, during which states had dramatically different minimum wage policies. Several factors make this decade attractive for analyzing minimum wages. First, states’ minimum wage policies were stable from 2010 through 2013, providing a baseline suitable for assessing employment trends before minimum wage increases. Second, states’ policies diverged substantially beginning in 2014. We compared outcomes between 2011 and 2013 with those in 2019 to analyze how they changed after several years of new minimum wages. Finally, nearly half the states kept their minimum wage at the federal minimum of $7.25 per hour. These states provide a control group with which we compared other states.

Our analysis yields several findings. First, consistent with prior research, our findings reveal that large minimum wage increases reduced employment among those without disabilities aged 16–21 but had little effect on most of the working-age population. We define large minimum wage increases as at least $2.50 between 2013 and 2017. In contrast, large minimum wage increases reduced employment among people with severe disabilities. Specifically, large minimum wage increases reduced the employment rate of people with severe disabilities by 3.2 percentage points for those aged 22–54 and by 2.1 percentage points for those aged 16–67 relative to those without disabilities. These effects were substantial, given that the employment rate was 13.2 percent for people with severe disabilities. People with nonsevere disabilities experienced minor changes in employment similar to those experienced by people without disabilities.

Furthermore, labor force participation decreased for those with severe disabilities, along with their position in the wage distribution (because the number of people with zero dollars in wages increased). For those with severe disabilities aged 22–54, their position in the wage distribution decreased by 1.8 percentiles relative to those of the same age without disabilities. Conversely, minimum wage increases raised the position in the wage distribution of those without disabilities. Finally, our research reveals some evidence that raising the minimum wage increased the probability that people with severe disabilities reported receiving public assistance. Specifically, large minimum wage hikes increased the probability of people with severe disabilities aged 22–54 reporting receiving public assistance by 1.7 percentage points, and they increased the probability of people with severe disabilities aged 16–67 reporting receiving public assistance by 1.4 percentage points relative to those without disabilities.

Note
This research brief is based on Jeffrey Clemens et al., “Divergent Paths: Differential Impacts of Minimum Wage Increases on Individuals with Disabilities,” National Bureau of Economic Research Working Paper no. 33437, January 2025.