The Economic Policy Institute released a report yesterday that shows employers committing wage theft costs American workers hundreds of millions of dollars a year.
A three-city study found that among low-wage workers, like those in the fast-food industry, “the average loss per worker over the course of a year was $2,634, out of total earnings of $17,616. The total annual wage theft from front-line workers in low-wage industries in the three cities approached $3 billion.”
If the findings in New York, Los Angeles, and Chicago are “generalizable” to the rest of the low-wage workforce in the rest of the country, about 30 million employees, “wage theft is costing workers more than $50 billion a year.”
The authors point out how much ridiculously higher this number is than the amount lost from other, more-feared crimes.
“It is useful to compare the cost of these wage and hour violations with crimes that are better recognized … thought they are much smaller in their overall dollar impact. All of the robberies, burglaries, larcenies, and motor vehicle thefts in the nation cost their victims less than $14 billion in 2012, according to the FBI’s Uniform Crime Reports. That is well over one-third of the estimated cost of wage theft nationwide.”
According to the report, in 2012, there were 292,074 robberies of all kinds — bank, residential, convenience and gas station, and street — and the total value of property stolen in them was $340,850,358. “Those are not the robberies that were solved; those are all the robberies that were reported to the police anywhere in the nation.”
While it is impossible to know how many times wage theft occurred in that same year, as many cases go unreported or uninvestigated, the “total amount of money recovered for the victims of wage theft who retained private lawyers or complained to federal or state agencies was at least $933 million — almost three times greater than all the money stolen in robberies that year.”
The authors of the study “canvassed the state labor departments and attorney generals, consulted the US Department of Labor’s [DOL] annual budget and relied on research for NERA Economic Consulting … on civil litigation settlements. They found:
- US DOL recovered $280 million for wage and hour violations
- State DOLs in 44 states recovered $172 million
- State Attorneys General in 45 states recovered $14 million
- Private attorneys recovered $467 million in wage and hour class action lawsuits
While the $933 million total is already astronomical, the authors point out that the real total recovered is likely much higher as they did not have data from six state DOLs (AL, AZ, DE, IN, LA, VT), and five attorneys general (AZ, AR, LA, NJ, OK).
To fix the problem of wage theft, the authors suggest that the number of investigators should be doubled, Congress should “enact various amendments that that would prohibit the award of federal contracts to firms convicted” of violations, and increase the maximum civil monetary penalty for “failure to pay the minimum wage or the required overtime premium,” which currently stands at just $1,100. They argue that for giant corporations like WalMart, the maximum penalty should be at least $25,000 per violation and $5,000 per violation for small businesses.