Disability in the Labor Market: Employment and Participation

Rajashri Chakrabarti, Thu Pham, Beck Pierce, and Maxim L. Pinkovskiy

Among people in prime working age (25-54), around 7 percent have a disability of some kind. In this set of companion posts, we will examine how prime-aged workers with disabilities have fared in the labor market compared to the year prior to the pandemic. In this first post, we will show that people with disabilities are far less likely to be employed than people without disabilities, with both lower labor force participation and higher unemployment playing a role. We will also show that although employment rates of people with disabilities are very low, they have risen rapidly during the post-pandemic period, largely because of rising labor force participation. Our results are consistent with an increased prevalence of work from home (WFH) arrangements in the post-COVID period differentially benefiting people with disabilities.

We obtain data on employment and disability status from the Current Population Survey (CPS). Respondents are asked to indicate whether or not they have a disability, and if they do, whether it is a vision, hearing, memory, physical, mobility, or care disability. It is important to note that respondents in the CPS are a representative sample of the civilian noninstitutionalized population and therefore people with disabilities are represented in proportion to their prevalence in the population aged 25-54 years old.  

The chart above presents employment rates for people without disabilities aged 25-54 and for the people with disabilities in that age group. We see that while more than 83 percent of the population aged 25-54 who do not have a disability were employed in August 2025, only about 45 percent of people with disabilities aged 25-54 were employed. The employment gap between people with and without disabilities is far larger than any of the racial, ethnic, and gender gaps, and is even larger than the employment gap between people with a bachelor’s degree and people who did not graduate from high school. 

However, the employment rate for people with disabilities was lower before the pandemic. In January 2019 it stood at a little under 37 percent, more than eight percentage points below its current level. During the pandemic, the fraction of people with disabilities who were employed tumbled to a low of 32.6 percent but then began a secular rise to exceed 47 percent in July 2024. Since that point, the employment rate for people with disabilities has decreased slightly to its present level but still remains far above its pre-pandemic numbers. 

Using the CPS, we can look at the employment rates for people with specific disabilities. As the above chart shows, as of August 2025, people with hearing and vision disabilities had employment rates above 50 percent, while people with memory disabilities had an employment rate of 43 percent. People with physical disabilities were employed at a rate of 29 percent, people with mobility or care difficulties at 22 percent (we combine these two groups to obtain more precise estimates and as these disabilities are substantially similar). Employment rates increased after the pandemic for nearly every disability category, although the rise was more pronounced for people with memory and physical difficulties. This increase may have been contributed to by two factors: the increased incidence of work from home and long COVID.  

First, expanded opportunities to work from home that arose during the pandemic and beyond may have been especially salient for workers with physical and care disabilities, opening up remote work opportunities and consequently resulting in increases in their employment rates. This factor played a positive role in employment rates for workers with other disabilities as well. A second reason may be that more prime-aged workers now have disabilities due to long COVID—for example, brain fog could be a “memory disability”—but remain employable, more so in a remote work setting, driving the employment rate of people with disabilities upward. In fact, the fraction of prime-aged with memory disabilities increased from 2.5 percent to 3.5 percent of the prime-age population after the beginning of the pandemic. The decline of employment rates for people with disabilities starting mid-2024 is consistent with the gradual curtailment of WFH opportunities in the workforce, as the fraction of workers engaged in telework fell from a peak of 23.8 percent in October 2024 to 22.1 percent in August 2025. 

Is the convergence of the employment gap between workers with and without disabilities that followed the pandemic driven by a convergence of labor force participation (LFP) rates or of unemployment rates? In the bottom panel of the above chart, we see a visible convergence of the labor force participation gap until mid-2024 (with the difference between the LFP of workers with and without disabilities declining by 10 percentage points), with the decline driven by an increase in the labor force participation of people with disabilities.  

In the top panel, we see a relatively constant gap in unemployment rates of workers with and without disabilities of roughly five percentage points since mid-2022, with few fluctuations over time. Thus, the convergence in employment rates between people with and without disabilities is driven by the convergence in their labor force participation rates. The labor force participation rate of people with disabilities peaked in July 2024 and subsequently declined by two percentage points, driving most of the concurrent decline in their employment rate. Nevertheless, unemployment is also a serious problem for people with disabilities, who experience unemployment rates of 8 percent, more than twice the rates for people without disabilities. So differences in both LFP and unemployment rates contribute to the employment gap faced by workers with disabilities. 

People with disabilities have some of the worst labor market outcomes among the groups we have considered in the Economic Heterogeneity Indicators (EHIs), but this picture has been evolving. The significant increase in employment for people with disabilities during the post-pandemic period may be a consequence of the interplay of two factors: increased remote-work opportunities and an increase in the fraction of people with disabilities due to COVID. However, it also suggests that the low labor market participation of people with disabilities may not be a constant and we will continue to monitor their labor market situation in future releases of the EHIs. In our companion post, we will discuss the labor market earnings of people with disabilities. 

Rajashri Chakrabarti is an economic research advisor in the Federal Reserve Bank of New York’s Research and Statistics Group.  

Thu Pham is a research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.

Beck Pierce is a research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.

Maxim Pinkovskiy is an economic research advisor in the Federal Reserve Bank of New York’s Research and Statistics Group.

 @article{
        ChakrabartiPhamPiercePinkovskiy2026,
        author={Chakrabarti, Rajashri and Pham, Thu and Pierce, Beck and Pinkovskiy, Maxim L.},
        title={Disability in the Labor Market: Employment and Participation},
        journal={Liberty Street Economics},
        note={Liberty Street Economics Blog},
        number={January 12},
        year={2026},
        url={https://doi.org/10.59576/lse20260112a}
    }

You may also be interested in:

Disability in the Labor Market: Earnings

Long COVID Appears to Have Led to a Surge of the Disabled in the Workplace

Do Veterans Face Disparities in the Labor Market—And What Accounts for Them?