Amongst individuals in prime working age (25-54), round 7 % have a incapacity of some variety. On this set of companion posts, we’ll study how prime-aged staff with disabilities have fared within the labor market in comparison with the 12 months previous to the pandemic. On this first put up, we’ll present that individuals with disabilities are far much less more likely to be employed than individuals with out disabilities, with each decrease labor power participation and better unemployment taking part in a task. We will even present that though employment charges of individuals with disabilities are very low, they’ve risen quickly through the post-pandemic interval, largely due to rising labor power participation. Our outcomes are in step with an elevated prevalence of work at home (WFH) preparations within the post-COVID interval differentially benefiting individuals with disabilities.
We get hold of knowledge on employment and incapacity standing from the Present Inhabitants Survey (CPS). Respondents are requested to point whether or not or not they’ve a incapacity, and in the event that they do, whether or not it’s a imaginative and prescient, listening to, reminiscence, bodily, mobility, or care incapacity. You will need to observe that respondents within the CPS are a consultant pattern of the civilian noninstitutionalized inhabitants and subsequently individuals with disabilities are represented in proportion to their prevalence within the inhabitants aged 25-54 years outdated.
Employment for Folks with Disabilities Is A lot Decrease than for Different Prime-Aged People
Word: The CPS covers the civilian noninstitutional inhabitants, which excludes active-duty members of the U.S. armed forces and other people confined to, or residing in, establishments or services.
The chart above presents employment charges for individuals with out disabilities aged 25-54 and for the individuals with disabilities in that age group. We see that whereas greater than 83 % of the inhabitants aged 25-54 who should not have a incapacity have been employed in August 2025, solely about 45 % of individuals with disabilities aged 25-54 have been employed. The employment hole between individuals with and with out disabilities is way bigger than any of the racial, ethnic, and gender gaps, and is even bigger than the employment hole between individuals with a bachelor’s diploma and individuals who didn’t graduate from highschool.
Nevertheless, the employment price for individuals with disabilities was decrease earlier than the pandemic. In January 2019 it stood at a bit of below 37 %, greater than eight proportion factors beneath its present degree. In the course of the pandemic, the fraction of individuals with disabilities who have been employed tumbled to a low of 32.6 % however then started a secular rise to exceed 47 % in July 2024. Since that time, the employment price for individuals with disabilities has decreased barely to its current degree however nonetheless stays far above its pre-pandemic numbers.
Employment Progress Extra Pronounced for Folks with Reminiscence and Bodily Difficulties
EPOP(%): bodily disabilities
EPOP(%): non-physical disabilities
Sources: U.S. Census Bureau/BLS – Present Inhabitants Survey (CPS) microdata; authors’ calculations, three-month transferring averages.
Word: The CPS covers the civilian noninstitutional inhabitants, which excludes active-duty members of the U.S. armed forces and other people confined to, or residing in, establishments or services.
Utilizing the CPS, we will take a look at the employment charges for individuals with particular disabilities. Because the above chart reveals, as of August 2025, individuals with listening to and imaginative and prescient disabilities had employment charges above 50 %, whereas individuals with reminiscence disabilities had an employment price of 43 %. Folks with bodily disabilities have been employed at a price of 29 %, individuals with mobility or care difficulties at 22 % (we mix these two teams to acquire extra exact estimates and as these disabilities are considerably related). Employment charges elevated after the pandemic for almost each incapacity class, though the rise was extra pronounced for individuals with reminiscence and bodily difficulties. This enhance might have been contributed to by two elements: the elevated incidence of work at home and lengthy COVID.
First, expanded alternatives to work at home that arose through the pandemic and past might have been particularly salient for staff with bodily and care disabilities, opening up distant work alternatives and consequently leading to will increase of their employment charges. This issue performed a optimistic function in employment charges for staff with different disabilities as properly. A second cause could also be that extra prime-aged staff now have disabilities on account of lengthy COVID—for instance, mind fog could possibly be a “reminiscence incapacity”—however stay employable, extra so in a distant work setting, driving the employment price of individuals with disabilities upward. In reality, the fraction of prime-aged with reminiscence disabilities elevated from 2.5 % to three.5 % of the prime-age inhabitants after the start of the pandemic. The decline of employment charges for individuals with disabilities beginning mid-2024 is in step with the gradual curtailment of WFH alternatives within the workforce, because the fraction of staff engaged in telework fell from a peak of 23.8 % in October 2024 to 22.1 % in August 2025.
Labor Power Participation Drives Employment Differential for Folks with Disabilities
Unemployment price (%)
Labor power participation (%)
Sources: U.S. Census Bureau/BLS – Present Inhabitants Survey (CPS) microdata; authors’ calculations, three-month transferring averages.
Word: The CPS covers the civilian noninstitutional inhabitants, which excludes active-duty members of the U.S. armed forces and other people confined to, or residing in, establishments or services.
Is the convergence of the employment hole between staff with and with out disabilities that adopted the pandemic pushed by a convergence of labor power participation (LFP) charges or of unemployment charges? Within the backside panel of the above chart, we see a visual convergence of the labor power participation hole till mid-2024 (with the distinction between the LFP of staff with and with out disabilities declining by 10 proportion factors), with the decline pushed by a rise within the labor power participation of individuals with disabilities.
Within the prime panel, we see a comparatively fixed hole in unemployment charges of staff with and with out disabilities of roughly 5 proportion factors since mid-2022, with few fluctuations over time. Thus, the convergence in employment charges between individuals with and with out disabilities is pushed by the convergence of their labor power participation charges. The labor power participation price of individuals with disabilities peaked in July 2024 and subsequently declined by two proportion factors, driving a lot of the concurrent decline of their employment price. However, unemployment can be a major problem for individuals with disabilities, who expertise unemployment charges of 8 %, greater than twice the charges for individuals with out disabilities. So variations in each LFP and unemployment charges contribute to the employment hole confronted by staff with disabilities.
Folks with disabilities have among the worst labor market outcomes among the many teams now we have thought of within the Financial Heterogeneity Indicators (EHIs), however this image has been evolving. The numerous enhance in employment for individuals with disabilities through the post-pandemic interval could also be a consequence of the interaction of two elements: elevated remote-work alternatives and a rise within the fraction of individuals with disabilities on account of COVID. Nevertheless, it additionally means that the low labor market participation of individuals with disabilities will not be a relentless and we’ll proceed to watch their labor market state of affairs in future releases of the EHIs. In our companion put up, we’ll talk about the labor market earnings of individuals with disabilities.
Rajashri Chakrabarti is an financial analysis advisor within the Federal Reserve Financial institution of New York’s Analysis and Statistics Group.
Thu Pham is a analysis analyst within the Federal Reserve Financial institution of New York’s Analysis and Statistics Group.
Beck Pierce is a analysis analyst within the Federal Reserve Financial institution of New York’s Analysis and Statistics Group.
Maxim Pinkovskiy is an financial analysis advisor within the Federal Reserve Financial institution of New York’s Analysis and Statistics Group.
The best way to cite this put up:
Rajashri Chakrabarti, Thu Pham, Beck Pierce, and Maxim L. Pinkovskiy, “Incapacity within the Labor Market: Employment and Participation,” Federal Reserve Financial institution of New York Liberty Avenue Economics, January 12, 2026, https://doi.org/10.59576/lse20260112a
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The views expressed on this put up are these of the creator(s) and don’t essentially replicate the place of the Federal Reserve Financial institution of New York or the Federal Reserve System. Any errors or omissions are the accountability of the creator(s).
