A bipartisan bill currently before Congress aims to eliminate subminimum wages for workers with disabilities, with co-sponsors ranging from Sen. Marsha Blackburn (R-Tenn.) to Sen. Kirsten Gillibrand (D-N.Y.). The long-standing argument against such legislation has been that it would lead to job losses for these workers. However, new peer-reviewed evidence challenges that claim, showing that states which have already ended the practice saw no significant decline in overall employment.
Researchers examined the impact in all 15 states that have abolished subminimum wages, analyzing data from the first complete national dataset of employers authorized to pay below minimum wage between 2015 and 2024. The study, published in Labour Economics, found that sheltered workshop employment dropped by roughly 2,000 workers per state within two years, as intended. Yet overall employment rates, hours worked, and competitive job placements remained stable across every state studied, with the trend persisting into the second and third years after policy changes.
The fiscal outcomes were even more striking. Welfare dependence among workers with disabilities fell by 12.4 percent after states ended subminimum wages, and this effect grew over time. Workers moved off public benefits and into the tax base, contradicting decades of warnings from opponents about increased fiscal burdens. The findings were derived from linking 15 years of Current Population Survey data with a staggered difference-in-differences analysis across all 15 states.
The economic case is further bolstered by existing vocational rehabilitation programs. A 2025 policy brief for the Department of Education's National Clearinghouse of Rehabilitation Training Materials documented that these services generate returns of $2.55 to $21.54 for every dollar invested, raise quarterly earnings by $1,442, and boost employment rates by 15.4 percentage points. The infrastructure to support the transition from sheltered work to competitive employment already exists and pays for itself.
Virginia serves as a model for a well-designed phase-out. As of April 2024, only 129 workers remained under five active subminimum-wage certificates in the state, down from roughly 4,000 before 2020, on track to meet a 2030 deadline. A $13.8 million federal grant from the Department of Education funds vocational rehabilitation counselors and the implementation project. The states that have already ended subminimum wages span the political spectrum, from Alaska and Tennessee to Maryland and California, often with bipartisan gubernatorial and legislative support.
National enrollment in subminimum wage programs has plummeted from about 220,000 workers in 2016 to roughly 40,000 in 2024 as states have acted independently. A 2023 Government Accountability Office report found that nearly half of remaining workers earn less than $3.50 an hour, and about one in ten earns a dollar or less. However, the transition is not equally easy for all workers. Those with the most significant disabilities and least competitive employment history face real barriers, particularly in states that ended subminimum wages without investing in supported employment and job coaching.
The Transformation to Competitive Integrated Employment Act, introduced in both the House and Senate, addresses these concerns by pairing a six-year phase-out with dedicated federal transition funding. The bill has bipartisan support, reflecting the success seen in 15 states. As the U.S. economy faces pressures like the middle-class squeeze where inflation outpaces wages, this reform offers a path to reduce welfare dependence while boosting economic participation. Similarly, the savings rate plunging to 2.6% as energy costs outpace wages underscores the need for policies that improve financial stability.
Michelle Yin, an economist and professor at Northwestern University who directs the RISEI Lab, led the research. She argues that the evidence is clear: ending subminimum wages works. With peer-reviewed national data confirming the benefits, bipartisan legislation drafted, and federal infrastructure in place, Congress should pass the bill and finish the work the states have started.
