Employers Steal $15B From Low Wage Workers Each Year


It’s The Real News Network. I’m Sharmini Peries coming to you from Baltimore. Wage theft, especially from lack of enforcement
of minimum wage laws, continue to be a serious problem in the US, and is likely to get worse
under the Trump administration. According to research conducted by the Economic
Policy Institute, up to $15 billion worth of wages are owed annually to minimum wage
workers across the United States. Companies often engage in wage theft simply
because they know they can get away with it. 36 states have only 10 or fewer wage theft
investigators and the Department of Labor only takes on particularly egregious cases
of wage theft, creating a real problem in this country in terms of what people are owed
and what they actually take home. So, joining me to take a closer look today
at this issue of wage theft is Dave Cooper. He is a senior economic analyst at the Economic
Policy Institute and co-author of the 2017 study titled, Employers steal billions from
workers’ paychecks each year. Thanks for joining us, Dave. Thanks for having me. So, Dave, let’s start off with you describing
some of the worst forms of wage theft that people experience. Sure. So, wage theft can occur in a variety of different
forms. It can be everything from a worker not being
paid for all the hours that theyve worked, to workers not getting overtime for working
more than 40 hours per week, someone getting paid less than the minimum wage, even things
like illegal deduction from folks’ paychecks or not getting meal breaks. The really egregious cases are when folks
don’t get paid at all and believe or not, that happens more frequently than we certainly
would like, particularly in certain industries where there’s a lot of use of, for example,
immigrant labor or sub-contractors who may not be paid, not just for all the hours that
that they work, but some of them don’t actually even get any of the money that they’re owed. Why are low wage workers or minimum wage workers
affected more by this kind of wage theft? Well, in some ways it’s just a function of
where they are in the wage scale. The fact that a lot of these workers are working
either at or close to the minimum wage, makes them more susceptible to those minimum wage
violations, because if they’re not paid for all the hours that they work, then their hourly
rate just sort of mathematically is falling below the minimum wage and their employer
as such is not paying them enough. But at the same time, a lot of workers who
are low-wage workers are particularly vulnerable group folks, like teenagers and young people,
women, people of color and, as I mentioned earlier, immigrant workers. These are folks that may have a harder time
speaking up when their rights are being violated. In my introduction, I said that wage theft
might get worse under the Trump administration, and one reason for this is that last December
the Department of Labor reversed an Obama administration decision to hold large companies
and their franchises jointly responsible for wage theft. In other words large companies, say like McDonald’s,
can once again claim that their franchises are responsible for wage theft and not the
main company. What are your thoughts on this policy change
and how big a problem do you expect it to be? Well, it’s a huge problem. It was already a huge problem even before
the Trump administration took this action. In many cases, if a worker wants to try and
fight for the wages that they’re owed, they don’t even know who their direct employer
is, because, as I said before, they may be contracted and if they try and go to the person
that’s contracting them to get the pay that they’re owed, that person then just defers
and says, “Well, no. It was this parent company.” It’s the same thing that’s happening with
these franchises. The workers try to go after the parent company,
like a McDonald’s, to pay them the wages that they’re owed and McDonald’s is able to pass
the buck to the franchisor. As a result of this Trump administration decision,
it’s just going to make it even harder for workers to get those wages. Now, your study, Dave, estimated that up to
$15 billion are stolen annually from minimum wage workers. How did you come up with this estimate? And in what industries and demographic groups
does this happen the most? Yeah. Well, first let me say that our estimate of
$15 billion annually is a conservative estimate. The way we came up with it is we looked at
wage theft, or specifically minimum wage violation in just the 10 most populous states in the
country, and the reason we looked at just those 10 states is because to do an analysis
like this, we have to take into account every state’s individual wage law, because believe
it or not, not all workers are actually entitled to minimum wage under Federal law and under
State law. The exemptions change dramatically from state
to state. But once we accounted for all those exemptions,
we looked at those 10 states and we just calculated how many workers were reporting getting paid
amounts that fell below the minimum wage. When you looked at the minimum wage in that
state and the hours that they reported working, we estimated that about 2.4 million workers
in those states were losing about $8 billion annually as a result of wage theft. And because the workforce in those 10 states
accounts for a little more than half the total US workforce, we can then extrapolate from
that and say that nationwide, it’s probably at least $15 billion that’s been stolen from
these workers. As I said before, that’s a conservative estimate
because in the states that we were looking at, these are bigger states, but a lot of
them are also states that have a little bit better enforcement capacity, places like California
and New York who are taking actions to fight this. A lot of the states that we weren’t able to
include in our study are states in the south that have no enforcement capability or don’t
bother to look into these things whatsoever. So, it stands to reason that violations are
going to be even worse in a lot of those states than the ones we were looking at. To your point about who this affects the most,
when we look at the workers were suffering these violations, it tends to be some of the
most vulnerable groups of workers, a lot of young people, predominantly people of color,
oftentimes immigrant workers and women suffer greater violations than men. In some ways, these higher rates of violations
among these groups are a function of the fact that these groups unfortunately are more likely
to be low wage workers to begin with, which just really means that this is a problem for
workers overall. It’s not just these groups that should be
concerned about this. Dave, tell us about this new rule change that
was introduced, in terms of tip wages and sharing the tips with the owners, and so on. What is that rule change about and how is
it going to affect workers? Yeah, so this is actually a rule change that
was proposed by the Trump administration Department of Labor, and what the rule change would do
is overturn an Obama administration policy which said that when a worker received tips,
that those tips are the property of that worker, unless they choose voluntarily to share that,
to put it in a tip pool with some of their colleagues. What the Trump administration is proposing
is to say that as long as those workers are paid at least the minimum wage by their employer,
that any tips they receive become the property of the house, they become the property of
the restaurant, and the restaurant can do what they want with them. Now, the administration is saying that this
rule will be important because it will allow restaurants to include back of the house workers,
like cooks and dishwashers, in the tip pool. So, ostensibly giving those workers a little
additional income from tips. But what’s interesting is that the administration
doesn’t actually require restaurants to do that. They say that the restaurants can do whatever
they want with that money. So, it stands to reason that if the restaurants
are already able to fill those jobs with the wages they are currently paying, there’s no
incentive for them to actually share any of that money with the back of the house, and
even if they do, they might just lower those back of the house workers’ base pay because
now they’re including them in the tip pool. Basically, this is a huge giveaway for restaurants,
so the National Restaurant Association has been lobbying for this for a long time. And we, at the Economic Policy Institute,
have estimated that this would probably lead to a transfer of about $5.6 billion in tips
from waiters, waitresses and bartenders to restaurant owners. That’s incredible, Dave. So, what needs to happen for wage theft to
be prevented as much as possible to protect the workers and their wages? I mean, everyone listening to this story is
going to be asking what can we do about it? So, what should workers be doing about it? Well, first of all they should be speaking
up. If their rights are being violated, they need
to speak up. They need to go to whatever enforcement agency
is available, go to a union if they’re lucky enough to have one, go to a worker’s center
if they can get in touch with someone there or go to an attorney to try and get their
claims processed. But really, to fight this more broadly, there’s
a number of things we need to do. The first one is we just need to increase
transparency because one of the biggest problems in fighting cases of wage theft is that workers
don’t actually have the documentation required to fight the claim. In a lot of states, employers are not even
required to provide payslips. So, the first thing we need is legislation
in every state that requires that workers get a pay stub that shows the hours that they
work, the wage that they should’ve been paid and any deductions from their pay. The second thing we need is just greater enforcement. We need stricter penalties when employers
violate these laws, and we need resources for state and federal investigative authorities
that they actually have the resources to hire investigators, and get those investigators
out investigating these claims. And finally, the last thing is we need to
protect workers’ ability to enter into class action suits whenever their rights are being
violated. Unfortunately, another problem that’s been
happening is a lot of workers are being forced to sign contracts that waive their rights
to enter into class action suits in the event that their wages are being stolen. And that’s another pernicious problem that
we have to deal with if we’re going to improve chances for workers to get what they’re owed. All right, Dave. I thank you so much for the report you’ve
written, as well as for this interview. We’ll try to put a link to the study just
below the player for those who want to explore this issue further. And thank you for joining us today. Wonderful. Thanks for having me. And thank you for joining us here on The Real
News Network.

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