In total dollars, what group steals the most from their fellow Americans each year?
The answer may come as a surprise: it’s employers, many of whom are committing systematic wage theft. And this isn’t just a matter of underpaying workers. Many are actually refusing to pay workers what they’re legally owed for the labor they provide.
This form of theft comes in three main categories: not paying workers the minimum wage; not paying them overtime; or just changing around job titles to avoid regulations.
Nobody knows precisely how pervasive the problem of wage theft is, but in 2012 federal and state agencies recovered $933 million for workers who’d suffered from wage theft. In comparison, all the property stolen in all robberies of all kinds that year — both solved and unsolved — amounted to a little under $341 million.
And keep in mind that $933 million was only the wage theft that had been addressed by authorities. The real scale of the problem is certainly larger, and likely staggering: much research suggests that American workers are getting stiffed out of $20 – $50 billion annually.
The most high-profile example from recent months came from our nation’s capital. The Senate employs several hundred food service workers in its cafeterias through a private contractor. In December, those workers successfully organized for a pay raise. But it was only then that workers discovered the private contractor had demoted them to job titles without changing any of their duties to duck under federal regulations about how much government contractors need to compensate their employees. That scandal led to a Labor Department probe, which found that contractors had been short-changing the workers in many other ways going back to 2010. Now 674 employees will be getting over $1 million total in back pay, or about $1,500 per person.
Catherine Rampell explained that some of the Senate cafeteria workers got such low pay that they were homeless or on public assistance. Indeed, Americans who suffer from the highest levels of wage theft are typically the most vulnerable and least powerful. Those include low-paid workers, those in service jobs, and frequently racial minorities or others belonging to marginalized groups.
Stories are rampant across the American workplace. A group of employees in Indiana, Kentucky, Illinois, and Florida who work for the traveling carnival company Midway Entertainment are suing for wage theft that runs back to 2013. Working a carnival can easily involve 12-hour shifts on many days. But the attorney for this class action lawsuit said they’d sometimes been paid as little as $5 an hour, because their employer evaded overtime requirements and other rules. The Chicago Tribune reported that two employees of a Dunkin’ Donuts franchise in Chicago sued in May for wage theft. Last summer saw a record wage theft settlement when 18 car wash workers from New Jersey and New York were awarded $1.65 million for denied pay and emotional distress.
Sadly, because these workers are typically the Americans who lack a voice and political clout, the wage theft that is reported and dealt with is only a small part of the problem.
In a comprehensive study from 2008 that surveyed 4,387 workers in Chicago, Los Angeles, and New York, results were astounding (the sample was designed to be representative of the 1.64 million low-wage workers across those three cities). More than 1 in 4 workers (or 26%) were paid less than the minimum wage, and two-thirds of those were shorted by more than $1 an hour. Seventy-six percent were not paid for overtime they worked the previous week — 11 hours of it, on average. Two-thirds were denied legally required meal breaks, and half of those who were injured and tried to claim workers compensation were subjected to some form of illegal retaliation.
In some industries, including construction and education, there were relatively low rates of wage theft — 12 to 13 percent. Then restaurants, grocery stores, and warehouses fell in the mid-range of 20 to 25 percent. Textile, clothes manufacturing and other services hit 40 percent; and a shocking 66 percent of child care workers experienced minimum wage violations, with 90 percent affected by overtime violations.
Race and gender were significant factors. Women experienced minimum wage violations at much higher rates than men. And for black Americans, wage theft was three times higher for than for whites. Highest of all was Latinos (here, race is likely combined with language barriers and immigration status to make many Latinos vulnerable). Employees at smaller businesses were at greater risk, as were employees with less education — though wage theft is a problem even for the college educated.
Total wage theft in just those three cities amounted to almost $3 billion annually. The Economic Policy Institute estimated that if the patterns the study found are generalizable for the entire country, wage theft is $50 billion a year.
What’s more, the Department of Labor only has just a little over 1,000 staff members investigating violations of wage and hour laws for the entire nation. The Obama administration requested an increase in funding for enforcement at least three times, but Congress denied them. Things have gone downhill since then. Wage theft is usually treated as a civil matter or dealt with by fines, and employers very rarely go to jail for it — a Papa John’s franchise owner made headlines in 2015 when he was sentenced to a mere 60 days.
Just compare that to the millions of poor and non-white Americans who spend months, years, or even their entire lives in prison for petty theft or drug possession.
Prosecutors and labor groups seem to be getting more aggressive about pursuing wage theft. And several senators are pushing a bill to increase staffing and funding to go after wage theft, and to crank up penalties, regulations, and recovery of back pay.
But for now the consequences remain paltry. And the crime spree goes on.