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The Difference a Job Makes: The Effects of Employment Among People with Disabilities

July 9, 2002
Journal of Economic Issues
Literature Review

Disability has been consistently linked to labor market difficulties in many studies. About 8 percent of working-age Americans report having a "work disability" (a health condition that limits the kind or amount of work they can do), of whom only one-third are employed in the course of a year (Burkhauser et al. 2001). Using a broader definition based on activity limitations and functional impairments (more closely reflecting the ADA's definition), 17 percent of working-age people have a disability, of whom about half (49 percent) are employed in a given month compared to over four-fifths (84 percent) of working-age people without disabilities (McNeil 2000). The figure is much lower among those with severe disabilities, of whom only one-fourth (24 percent) are employed in a given month. Among those who are employed, a variety of studies have estimated that people with disabilities earn 10-25 percent less on average than otherwise-comparable people without disabilities (summarized in Baldwin 1997, 43). Negative effects of disability on employment and earnings have been found in both cross-sectional and longitudinal comparisons before and after disability onset (Burkhauser and Daly 1996). The low employment rates contribute to lower levels of household income and higher rates of poverty among people with disabilities (Kruse 1998).

While a portion of the employment and earnings gaps is probably due to lower productivity associated with many disabilities, prejudice and discrimination may also play a role, as suggested by the finding that wage gaps are higher for people who have disabilities that elicit the most negative social attitudes (Baldwin 1997). In addition, the work disincentives provided by government disability income programs also appear to contribute to the low employment rates of people with disabilities (Bound and Waidmann 2000).

Along with the employment gaps, people with disabilities have lower education levels (Kruse 1998) and experience greater social isolation. They are less likely to be married, more likely to live alone, and less likely to socialize with friends outside the home or to be involved in religious, recreational, or other groups or activities (Louis Harris and Associates 2000). They are also less likely to vote and take part in other political activities (Schur et al. 2002). Many people with disabilities experience transportation difficulties, which contribute to their isolation (Louis Harris and Associates 2000). The lower resource levels and greater isolation contribute to lower life satisfaction levels reported by people with disabilities (Louis Harris and Associates 2000).

Employment may not only reduce the income gaps between people with and without disabilities but also reduce the gaps in social and psychological measures. Most jobs involve interactions with co-workers or members of the public, which can help decrease social isolation and build social capital (Putnam 2000). Employment often increases civic skills and exposure to political recruitment and has other resource and psychological effects that can increase the likelihood of political participation (Schlozman et al. 1999). Finally, employment may increase life satisfaction through increased resources, decreased isolation, and a greater sense that one is filling a valuable social role. While the social and psychological benefits of employment are often proclaimed, there has been very little study of the existence and extent of those benefits and of whether employment plays a more important role among members of marginalized groups such as people with disabilities.

Data and Methods

This paper makes use of two datasets. The first is the 1999 disability supplement of the Survey of Income and Program Participation (SIPP), which is used for employment, earnings, income, and poverty comparisons between individuals with and without disabilities. The disability definition is based on a series of questions that identify a variety of impairments and activity limitations (McNeil 2000). The second data source comes from two national household surveys conducted following the November elections in 1998 and 2000. The surveys, conducted by the Rutgers Center for Public Interest Polling, included a variety of questions on employment, political participation, civic skills, political efficacy, group activities, life satisfaction, and disability discrimination. The final samples included 1,242 US citizens of voting age in 1998 and 1,002 in 2000. To ensure a sufficient sample for analysis of disability issues, the samples were stratified to oversample people with disabilities, resulting in an overall final sample of 1,132 citizens with disabilities and 1,112 citizens without disabilities. The disability screening questions were based on the six disability questions used in the 2000 US Census, plus two questions from the Harris disability survey. Where more than one person in a household was identified as having a disability, the interviewer asked to speak to the person with the most recent birthday. (All survey questions are available on request.) The figures in this paper are based on those of working age (18-64), comprising 668 citizens with disabilities and 924 citizens without disabilities.

To explore the effects of employment, this paper first presents comparisons of employment variables between people with and without disabilities and then compares economic, social, psychological, and political outcomes between employed and non-employed people separately for the disability and non-disability samples. A comparison of simple gaps in outcomes may be a biased estimate of the effects of disability or employment due to omitted variables-for example, the lower employment and earnings levels of people with disabilities are partly explained by their lower levels of education. To control for important omitted variables, regressions were run estimating the disability gap in employment variables and the employment gap in economic, social, psychological, and political variables. In addition to controlling for education and other demographic variables, the regressions control for types and severity of disability, since (as will be seen) these are highly related to employment. Rather than including full regression results, the tables present just the coefficient showing the estimated disability or employment effects. The resulting figures provide a guide to the likely effects of disability and employment, although it must be recognized that selection effects or other unobserved variables may also help to account for the observed relationships.


Consistent with other studies, both the SIPP data and the 1998/2000 Rutgers surveys show that employment rates are especially low among people with disabilities. As shown in table 1, significantly less than half of the working age people with disabilities are employed in the United States (46.3 percent were employed in the last month according to SIPP and 45.5 percent in the last week according to the Rutgers surveys), compared with more than 80 percent of the working age people without disabilities (82.2 percent in the last month and 81.9 percent in the last week). These gaps are reduced but remain very large and strongly significant when controlling for demographic and disability characteristics (column 3). Among those who are employed, workers with disabilities are more likely to work part time, and both their hourly and annual earnings are significantly lower than those of their non-disabled counterparts. The remaining earnings gaps may reflect a combination of lower productivity associated with many impairments, and employer discrimination against people with disabilities (Baldwin 1997).

The 2000 survey also asked employed respondents whether they had performed several skill-enhancing tasks at work in the past six months. As shown in table 1, employed people with disabilities were significantly less likely than those without disabilities to have given a presentation or speech at work and less likely (although not significantly so) to have participated in decision making, planned or chaired a meeting, or written a letter. These results combined with the lower earnings of people with disabilities indicate that simply having a job does not eliminate some of the economic and skill gaps they face.

Do employment rates vary according to the type or severity of disability? People with more severe disabilities are more likely to have health problems that limit the time and energy they can devote to work and are less likely to drive a car, which can make commuting to work more difficult. The data in table 1 show that employment is most common among those with sensory impairments (which includes visual or hearing impairments) or "other type" of impairments (which includes such conditions as high blood pressure and cancer). It is lowest among those with mobility and mental impairments, particularly among those with the most severe impairments-those who have difficulty going outside alone or performing activities inside the home, and those who need help with daily activities. Given that people with more severe activity limitations are less likely to be employed, it is important to account for differences in type and severity of disability when estimating the potential effects of employment on other outcomes.

How does employment affect economic, social, psychological, and political outcomes? Consistent with the idea that employment may have stronger effects among members of marginalized groups, employment seems to have a stronger effect on several outcomes among people with disabilities. Even though people with disabilities have lower earnings on average, employment is estimated to raise their household income levels by 49 percent compared to only 13 percent among people without disabilities. This reflects greater access to other sources of income (such as from a spouse) among non-disabled people who are not working outside the home. Perhaps more importantly, employment has a slightly larger effect on the probability of escaping poverty among people with disabilities, lowering their poverty rate by 20 percentage points, compared to 17 points among people without disabilities. (It is important to note, however, that the poverty rate of employed people with disabilities remains higher than among employed people without disabilities, due to their lower work hours and earnings.)

Employment also appears to play a large role in alleviating social isolation among people with disabilities. While employed people with disabilities have less time to participate in groups, they are still about 10 percentage points more likely to meet regularly with groups than those who are not employed. However, their participation in disability groups is similar, reflecting the importance that disability groups can have in providing support to many non-employed people with disabilities. Interestingly, there is no significant difference in group attendance between employed and non-employed people without disabilities, indicating that the lack of employment is more isolating for people with disabilities.

Measures of psychological well being are particularly low among non-employed people with disabilities. Employment appears to increase overall life satisfaction and the feeling of being useful and needed, while decreasing feeling "down-hearted and blue," to a greater extent among people with disabilities than among non-disabled respondents. However, these questions were only asked in the 2000 survey and the sample size is too small to yield statistically significant differences.

Employment can help people develop a variety of skills that are useful not only in the workplace but in other areas of life, such as community and political participation. These "civic skills" were measured by asking respondents, "Compared to most people are you not as good, about the same, better, or much better at the: a) ability to work with others? b) ability to speak in public? c) ability to lead a group? d) ability to compose an effective letter to an elected official? e) communicating your ideas to others?" An index was created by giving one point for each skill for which the respondent said that he or she was better than average. As shown in table 2, employment seems to play an especially important role in increasing the civic skills of people with disabilities, although they remain below the level of employed people without disabilities.

In addition to civic skills, perceptions of political efficacy have been shown to influence political involvement. Internal political efficacy is the belief that one is competent to participate in politics, while external political efficacy is the belief that the political system is responsive to one's interests. While there were no significant differences in overall measures of political efficacy between employed and non-employed respondents, employed respondents with disabilities were significantly more likely than their non-employed counterparts to say that people with disabilities get equal respect and have equal influence in politics. These results reveal the political alienation experienced by many non-employed people with disabilities, which can be expected to discourage conventional participation but may sometimes motivate disability activism. Employment appears to contribute to a greater sense of inclusion in mainstream society, which can increase perceptions that people like oneself have influence and are respected by politicians.

As noted earlier, people with disabilities have relatively low levels of voter turnout and other forms of participation. These data indicate that the lower levels of participation are concentrated among non-employed people with disabilities. A political participation index was constructed using eight activities that the respondent may have done in the past year (such as voting, contributing money to a campaign, and attending a political meeting). As can be seen in table 2, employed people with disabilities have done significantly more of these activities than non-employed people with disabilities. The effect of employment on participation is also positive, but smaller, among the non-disabled respondents. A separate analysis of these data shows that the effect of employment operates mainly through increased income and political recruitment at work (Schur 2001). While overall political participation is greater among employed people with disabilities, levels of disability activism are similar between employed and non-employed people with disabilities, probably reflecting the greater number of disability-related problems faced by non-employed people with disabilities.

What is the relationship between employment and experiences of discrimination? About one-fifth of employed respondents with disabilities reported encountering disability discrimination in the past five years, compared with almost one-third of the non-employed people with disabilities. Interestingly, employed respondents were less likely to take action against perceived discrimination, perhaps reflecting the belief that they had too much to lose by challenging unjust treatment. While it is encouraging that a majority of people with disabilities did not report experiencing disability discrimination, the results of this survey can be extrapolated to estimate that about 4.2 million people with disabilities believe they have experienced discrimination in the past five years.


Employment may play a particularly important role among members of historically marginalized groups, such as people with disabilities, who often have low employment levels that contribute to high poverty rates, social isolation, political alienation, and low levels of civic skills and political participation. The results of this analysis support the idea that employment can have special benefits for people with disabilities. Not only does it increase incomes and help lift people out of poverty, it also helps people overcome the social isolation that often accompanies disability. In addition, employment can lead to the development of civic skills that facilitate participation in a variety of community and political activities outside the workplace. It also increases the perception that people with disabilities receive equal respect and have equal influence in the political system, reflecting their greater sense of inclusion in mainstream society. Finally, employment appears to have especially strong effects on the political participation of people with disabilities, counteracting the alienation experienced by many non-employed people with disabilities.

These estimates probably provide an upper bound on the actual effects of employment since, despite the controls for disability type and severity, the results may be explained by selection effects or unobserved variables. While this clearly deserves further research (ideally with panel data), these initial findings nonetheless provide some additional support for public policies designed to increase employment among people with disabilities.

Given the important benefits to be gained from working, the persistent low employment levels among people with disabilities are especially troubling. These findings suggest that increased employment will significantly reduce the economic and social disparities facing people with disabilities, helping them gain economic security and become more fully integrated and engaged in mainstream society.

© 2002 Journal of Economic Issues