Employment Costs of an Increasing Minimum Wage for Workers With Disabilities

Katie Jajtner , University of Wisconsin-Madison

Congress introduced legislation to increase the Federal minimum wage from $7.25 to $15 per hour over seven years in May, 2017 (S. 1242). This paper uses a structural unemployed labor market search model to simulate how such changes may differentially affect employment for workers with and without disabilities. Monthly data comes from the 2016 Current Population Survey, and disability is defined as self-reported functional limitations. Results simulating an increase in the Federal Minimum Wage from $7.25 an hour to $10, $12, and $15 suggest workers with disabilities could experience additional unemployment that is approximately four to five times larger than their counterparts. While this model simulation showcases the asymmetric employment costs of a rising minimum wage for workers with disabilities, it does not consider the benefits, which may also be disproportionately allocated to the same group. Nevertheless, it is an important cost to consider, and future research should address benefits.


 Presented in Session 8. Economy, Labor Force, Education, & Inequality