By Dr. Michelle Lu Yin, Economist, AIR
For working-age people with disabilities, employment and earnings challenges are a fact of life. People with disabilities are less likely to participate in the labor market and less likely to hold a job than their peers without disabilities. Even when they are employed, people with disabilities at every level of educational attainment are paid less. In the marketplace, however, the story is different. People with disabilities—and their families, friends, and advocates—wield considerable spending power for high-quality products and services. This underrecognized market sector offers tremendous potential.
These challenges and opportunities are interrelated, with consistent, mutually reinforcing implications for employers, policymakers, and researchers. For employers, there is a strong business case to make for strategically targeting this market sector. To serve this market well, employers need to hire more people with disabilities to better understand and innovate for the market. Not only can people with disabilities offer employers valuable insights on products and services, they also can help employers foster more diverse and inclusive workplace environments.
There has never been a better time for employers to move in this direction. Low-cost accommodations and advanced technologies ease the barriers to employment that people with disabilities historically have faced, from getting to work to navigating the workplace to making meaningful contributions.
About Our Research
Our work at the American Institutes for Research (AIR) provides new evidence on how adults with disabilities fare in the workplace. Specifically, we have analyzed the labor force participation and earnings of adults with disabilities compared to their non-disabled peers with similar educational attainment. We also have analyzed gaps in access to employment through the lens of different types of disability, and in different regions of the country. Most recently, we have measured the purchasing power of adults with disabilities. Each of these studies explored uncharted territory, giving us a more coherent and comprehensive view of equity, diversity, and inclusion.
Our research addresses both the challenges and opportunities for working-age adults with disabilities and for employers who care about diversity in the workplace. It also points the way to evidence-based solutions that would improve people’s lives and benefit employers. This is a win–win proposition. On the labor side of the equation, employers can use research findings to improve their recruiting, hiring, retention, promotion, and compensation practices, as well as their support for employees with disabilities—and unique abilities. For employers, more inclusive practices—from diversifying the talent pool to developing new products and services for people with disabilities to enhancing brand image—can yield bottom-line benefits.
Income Disparities—and the Fallout Effects
Most of us take it as a given that education is the ticket to success. In general, this is true: According the U.S. Bureau of Labor Statistics, “More education leads to better prospects for earnings and employment.”
However, data about the general population mask the reality for the nearly 10% of working-age adults who have disabilities. Despite increasing national interest, policies, programs, and incentives to move people with disabilities into postsecondary education, training, and work, people with disabilities often come up short on payday.
Our report, An Uneven Playing Field: The Lack of Equal Pay for People with Disabilities (Yin, Shaewitz, & Megra, 2014), presents the findings from our comparative analysis of the incomes of full-time, working-age adults (ages 16–64) with and without disabilities. What we found is alarming: Despite equivalent educational attainment, earnings inequalities exist between the two groups—and, surprisingly, the gap actually widens as educational attainment increases. The greatest earnings inequalities occur among those with a master’s degrees or higher.
The number of individuals and families affected by these earnings disparities is not insignificant. By our conservative calculations, more than 4.8 million adults with disabilities who have high-school or equivalent degrees, more than 1 million with bachelor’s degrees, and more than 450,000 with master’s degrees or higher were employed full-time in 2011. Millions more with less than a high school credential were working as well. These estimates likely are higher today, because the U.S. population has increased and employment has rebounded in the recovering economy.
For context, adults with disabilities are less likely to be employed than their non-disabled peers. In 2017, about 37% of working-age adults with disabilities were employed, compared to about 79% of those without disabilities (Erickson, Lee, & von Schrader, 2019). People with disabilities tend to earn less because of work limitations. This population as a whole tends to be older, and to have higher numbers of minorities, and have lower levels of educational attainment. In 2017, about 34% of working-age adults with disabilities had only a high school or equivalent degree, compared to 25% of those without a disability. About 15% of working-age adults with disabilities had earned a bachelor’s degree or higher, compared to about 35% for those without disabilities (Erickson, Lee, & von Schrader, 2019).
Even so, we would expect greater parity in earnings between workers with similar educational attainment, with or without disabilities. We tested whether workers with disabilities face greater economic discrimination than those without disabilities. Results of this analysis showed that people with disabilities do, indeed, face a level of economic discrimination similar to that of female employees—that is, 37% lower pay for people with disabilities compared to 35% lower pay for women.
These findings should concern us all. Earnings inequalities for people with disabilities translate into lower pay—and the pay deficits accrue over a career. In 2017, the median household income for households that include any working-age people with disabilities was $45,500, compared to $71,000 for households that do not (Erickson, Lee, & von Schrader, 2019).
Lower rates of employment and educational attainment directly influence earnings for all workers, but poverty looms more heavily over the disabled population. In 2017, the poverty rate for non-institutionalized working-age people with disabilities was 26%, compared to 10% for the those without disabilities (Erickson, Lee, & von Schrader, 2019).
Education and employment are not enough. Equal pay for equal educational attainment is key for economic independence and security. Moreover, it’s not just people with disabilities who are losing out. Employers are missing a great opportunity to leverage their talent, as the next set of findings on the market sector demonstrate.
The Power of the Purse
Any employer committed to hiring people with disabilities is likely familiar with some of the business benefits—a more diverse workforce, with employees who bring unique insights and diverse skills sets. Employing people with disabilities also enhances public image. The vast majority of consumers have a more favorable perception of companies that hire people with disabilities, and about a third of consumers prefer to give their business to such companies (Siperstein, Romano, Mohler, & Parker, 2006). Societal acceptance of people with disabilities continues to increase.
What you might not know is that the economic clout of the 22 million working-age adults with disabilities is substantial—and most employers are not taking advantage of this market. In The Hidden Market: The Purchasing Power of Working-Age Adults With Disabilities (Yin, Shaewitz, Overton, & Smith, 2018), we calculated the purchasing power of this market segment:
- The total after-tax disposable income for working-age people with disabilities is about $490 billion, which is similar to that of other significant market segments, such as African Americans ($501 billion) and Hispanics ($582 billion). (Disposable income is the amount of money available to a household for both saving and spending, after taxes.)
- Discretionary income for working-age people with disabilities is about $21 billion, which is greater than that of the African-American and Hispanic market segments combined. (Discretionary income is the money remaining after deducting taxes, other mandatory charges, and spending on necessities, such as food and housing.)
Let’s put this half-a-trillion-dollar market in context. The U.S. Office of Disability Employment Policy (ODEP) notes that people with disabilities are “the third largest market segment in the United States” (ODEP, 2012). Moreover, this market size more than doubles if we consider that family members, caregivers, friends, colleagues, and others who are connected to consumers with disabilities prioritize goods and services that are inclusive of them.
Even though people with disabilities generally have less disposable and discretionary income than people without disabilities, they still have sizeable resources. They buy high-quality services and products, ranging from financial products to homes, cars, and furniture to accessible technology, long-term care services, and other disabilityrelated products and services.
There’s also significant variation in the market size in the states, as measured by disposable and discretionary incomes. Population size factors into this variation. California, Texas, New York, Florida, and Pennsylvania have the largest number of citizens with disabilities, as well as higher total amounts of disposable and discretionary incomes.
Our research confirms that this is a large, underrecognized market ready to be tapped. The time is right for employers to strengthen inclusiveness as a smart business strategy in hiring and in the marketplace. Low-cost accommodations and advanced technologies can reduce the barriers to employment. Our third study examined these barriers.
Diversity of Disabilities, Diversity of Access
Since at least the mid-1970s, policymakers and forwardthinking employers have promoted workforce training, accessibility, and employment for people with disabilities. Today, the economy is doing well. Unemployment is low. Labor markets are tight. So why do millions of workingage adults with disabilities who are willing to work remain on the sidelines?
The answer is, it’s complicated. Overall, the labor force participation rate of people with disabilities is substantially lower than for nondisabled people. About a third of people who aren’t looking for a job are disabled—and this figure continues to rise, despite the economic recovery. But people with disabilities are not a homogeneous group, as we report in One Size Does Not Fit All: A New Look at the Labor Force Participation of People with Disabilities (Yin & Shaewitz, 2015). Our data analysis revealed a more nuanced story behind the overall labor force participation rate. Among the key findings:
- The employment rate for all working-age people in 2013, in the midst of the Great Recession, was 70%. The employment rate for working-age people with disabilities as a whole that year was 25%.
- For people with disabilities, the employment rate varies considerably depending on the type of disability, from 45% for people with vision or hearing difficulties, to 22% for people with ambulatory difficulties and 21% for people with cognitive disabilities, to 14% for people with self-care difficulties.
- For people with disabilities who remained employed during this period, the type of employment they were likely to find tended to be low-income jobs with poor or low benefits and few opportunities for career progression. This suggests that people with disabilities face long-term reverberations for career advancement, benefits, and living wages, which may explain why many are discouraged from seeking employment.
- Labor force participation for people with disabilities also varies widely in the states. Midwestern states tend to have higher participation rates; Southeastern states tend to have lower rates. There are many variables at play here—the size and concentration of this population, state economic health, and state provisions for empowering people with disabilities to join the workforce.
Waves of retirement among older workers are expected to open up tens of millions of jobs in coming years. There’s growing employer interest in expanding the talent pool to people with disabilities to fill these jobs. Scaling opportunities for people with disabilities to join the workforce, and stay in it for the long term, will take targeted, multipronged strategies.
Implications for Employers, Researchers, and Policymakers
Research is more than an academic exercise. We want to help employers, policymakers, and community leaders understand the challenges and opportunities of engaging adults with disabilities in the workplace and in the marketplace. Evidence can inform policies and practices designed to improve people’s lives. To that end, we strongly encourage employers to participate in data collection and research. More research would benefit employers and help all of us better understand this complex labor and consumer market, which is both significant and diverse.
Already, though, our research suggests that there are many ways for employers to better serve people with disabilities in the workplace and the marketplace.
Implications for employers Increase job opportunities for people with disabilities.
In an increasingly tight labor market, employers are finding that with inclusive practices and low-cost accommodations, they can increase their supply of highquality workers with disabilities. Hiring people with disabilities opens up a great source of talents to meet market demand and provide creative thinking and design ideas that will propel innovation forward.
Close earnings gaps.
Employees with disabilities who have the same education or training as those without disabilities should be compensated fairly. Lower earnings compromise their quality of life—and may make them feel undervalued.
Differentiate opportunities and supports.
People with disabilities have different needs, depending on their disability. Employers should take the time to understand their workers’ disabilities—and encourage them to ask for the support they need. Disability resources and awareness training for all staff can help employers better serve and work with people with disabilities.
Reassess your business strategy for inclusiveness.
Employers on the vanguard of inclusiveness do more than hire workers with disabilities. They target the geographic regions where people with disabilities are concentrated, for both hiring and marketing of their products and services. They design and develop their products and services in collaboration with people who have disabilities, thus broadening their reach. And they build their brand image and loyalty by featuring people with disabilities in their marketing and advertising.
For example, assistive technologies such as voice recognition devices and software were once targeted for people with disabilities. Today, Amazon’s Alexa, Apple’s Siri, and Google’s Assist are mainstream products. Applying universal design principles to any product or service development is a smart strategy, saving the cost of retrofitting down the line and expanding the market to people with and without disabilities as customers. Some people with disabilities are considered extreme users—first adopters who discover new ways of using advanced technologies and spark innovation for all consumers.
People with disabilities also can bring unique insights into the challenges of everyday products and services. The fashion industry is out front in this regard. Nike, Tommy Hilfiger, and Zappos offer accessible, fashionable attire for a broad range of physical and mental disabilities, such as wheelchair-friendly adaptive clothing, shoes, and sensoryfriendly clothing for people on the autism spectrum and those who live with nerve pain and tenderness. More companies are making the hidden market of people with disabilities more visible in their advertising as well. Microsoft, Nordstrom, Procter & Gamble, T. J. Maxx, Target, and Walgreens are among the companies that feature people with observable disabilities in their ads.
Implications for researchers
Our research provides new evidence of how people with disabilities fare in the workplace and the marketplace. But we need to know more. For instance, future studies could explore more deeply how pay gaps vary by disability type; by educational attainment and expertise; by industry; and by geographic region. Future studies also could analyze why these pay gaps exist.
Implications for policymakers
Despite an array of policy measures since at least the mid-1970s, such as explicit work incentives, vocational rehabilitation services, and more accessible workplaces, labor market outcomes for people with disabilities have not improved in more than 40 years. The evidence suggests it’s time to move in new directions:
- Reconsider one-size-fits-all policies. The needs of people with disabilities are different, depending on the type of disabilities. Targeted approaches—for people with different cognitive, ambulatory, vision or hearing, and self-care difficulties, with different levels of educational attainment and skills, and at different ages—could yield better outcomes.
- Look to the future and leverage technology. The fourth industrial revolution is transforming the disability market. Automation, artificial intelligence, and the Internet of Things can provide people with disabilities with greater access to the labor market. For instance, transportation is the number-one barrier that people with disabilities face. Today’s technologies allow many workers, including those with disabilities, to work from home. Autonomous vehicles will soon be another common alternative.
About the American Institutes for Research
The mission of the American Institutes for Research (AIR) is to conduct and apply the best behavioral and social science research and evaluation towards improving people’s lives, with a special emphasis on the disadvantaged. Our recent research on improving the lives of adults with disabilities, especially in the workplace and the marketplace, is in keeping with this mission.
At AIR, diversity and inclusion are missioncritical. Several years ago, AIR leaders made an organizational commitment to live this value much more deliberately. AIR made a long-term, systemic, and comprehensive investment in diversity and inclusion. Diversifying our workforce is not enough: Equally important is creating an environment where people can bring their full selves to work every day, so we can fully leverage every employee’s talent and skills.
AIR now has a full-time chief diversity officer, a Diversity and Inclusion Department, and a Diversity and Inclusion Council. We conducted organizational, national, and international benchmarking of best practices. We developed a strategic plan, modified polices, and developed change management and communications strategies to promote diversity and inclusion. We support vibrant, popular employee resource groups, including Access AIR for employees with disabilities, to promote cultural awareness, professional development, collegial support, and greater visibility for diversity at AIR. And we launched a multiyear professional development program on diversity and inclusion that is required for every employee. For these efforts, Diversity MBA magazine selected AIR for the first time as a “best in class” organization on its 2018 50 Out Front list.
Dr. Michelle Lu Yin is a principal economist at the American Institutes for Research (AIR), where she focuses on labor economics. She has led a range of research studies using quasiexperimental designs in the areas of disability, secondary and postsecondary education, and science policy. She has a strong background in policy evaluation design, survey design, and statistical analysis.
Dr. Yin’s research with her AIR colleagues has deepened our knowledge about people with disabilities as workers and consumers. She has explored gaps in the research on labor force participation, finding alarming earnings disparities between disabled and nondisabled workers that have significant economic impact. Her analyses of labor market data challenge assumptions that people with disabilities are one homogeneous group, suggesting a need to account for diversity in policies and programs to improve labor market outcomes. Most recently, her research on the purchasing power of 20 million workingage adults with disabilities revealed two opportunities for business: a significant and underrecognized market segment, and a largely untapped sector of the workforce whose diverse skills sets and unique insights could contribute to the design and development of new products and services.
Dr. Yin is currently the principal investigator of two evaluation projects for Special Olympics Unified Champion School programs with a focus on high school students with and without intellectual disabilities. She also is the principal investigator of an evaluation study of a Transition Work-Based Learning Model for youth with disabilities in the state of Maine.
Dr. Yin’s professional experiences also include leading projects on teacher effectiveness and student labor market outcomes in adult education, design and labor market consequences of accountability in adult education, and higher education finance and accountability. She has served as lead methodologist on impact evaluation projects at both state and national levels. In these projects, she designs and conducts impact analyses of program interventions and randomized control trials.
Dr. Yin received her Ph.D. in economics from the University of Florida. She was a visiting scholar at Northwestern University prior to joining AIR. She is a U.S. Department of Education What Works Clearinghouse certified reviewer.