Don't let employers rob their workers

Government needs to crack down on wage theft

November 17, 2010|By Sally Dworak-Fisher

With a week left before Thanksgiving, people in cities across the country are coming together to remember those who are struggling to put food on the table because they are victims of a crime wave that few people even talk about. The National Day of Action Against Wage Theft calls attention to the widespread injustices faced by vulnerable workers across the country. It also provides a timely opportunity to appreciate the severity of the problem, understand its pernicious effects, and come together to work for solutions close to home.

As the economy has soured, a growing number of employers have adopted business models that rely on maximizing profit by skirting workplace protections, including protections as basic as the right to minimum wage and overtime. In a recent study of low-wage workers in three major cities, researchers found that more than one-quarter of workers surveyed were paid less than the minimum wage in the preceding week, and more than three-quarters were not properly paid overtime. The study further found that such workers lose $56.4 million per week in wage violations. Moreover, such violations are not confined to traditional sweatshop industries like big apparel but are increasingly found in other low-wage, service sector jobs such as hospitality and restaurant services, delivery services, grocery stores, car washes and retail services. Not even employees of large businesses are immune from this seeming epidemic; Staples Inc. and Wal-Mart were recently required to pay $42 million and $35 million, respectively, in unpaid wages.

As with other forms of robbery, the costs of wage theft are not borne solely by its victims. Rather, the impact is felt by families, communities, businesses and government. Imagine that the workers who lose $56.4 million per week were actually paid the wages owed them for their work: Given that low-wage workers spend a larger percentage of their pay than more highly paid workers, they would likely spend that money in their local communities — buying goods, supporting businesses and job growth, and making sure their children are safe and healthy. In other words, those stolen wages could be taking care of families and stimulating local economies.

Likewise, the reduced payroll hurts government; as payroll and tax revenues decrease, lawmakers are forced to cut spending on public goods and services. Finally, when some businesses engage in wage theft with impunity, it changes the playing field for all businesses. Law-abiding employers are unfairly disadvantaged by businesses that compete by cheating their workers, and such tactics increase pressure on all employers.

This race to the bottom is not surprising given the lack of resources for wage theft enforcement in state and local departments of labor. According to a study by the Government Accountability Office, the number of wage theft enforcement actions undertaken by the federal government decreased 30 percent between 1997 and 2007. State departments of labor are also strapped, with a recent study revealing only about 660 investigators enforcing state minimum wage and related laws for nearly 100 million workers, or more than 146,000 workers for each investigator. While Maryland is perhaps above average, with five investigators devoted to wage payment for the entire state, two of those positions are set to be cut next July.

Despite the seemingly bleak outlook, we can still ensure that workers have meaningful opportunities to enforce their basic right to be paid for their labor. Those who believe in an honest day's pay for an honest day's work can come together to strengthen laws against wage theft, hold low-road employers accountable, and support law-abiding employers. At a minimum, we must ensure that state and local enforcement agencies are adequately staffed so that they can aggressively pursue offenders and send a message that employers cannot cheat their workers with impunity. At the same time, we need to close legal loopholes that permit low-road employers to hide behind corporate shells and effectively leave cheated employees without remedy.

Finally, we must ensure that workers who assert their rights have adequate protection from retaliation, such that they can seek redress without fear of demotion or termination. Although change is likely to take time, the current economic climate cannot excuse basic failures to pay wages owed for work performed. Putting an end to unlawful and inhumane wage theft is something we can all be thankful for.

Sally Dworak-Fisher is the director of the Workplace Justice Project at the Public Justice Center in Baltimore. Her e-mail is dworak-fishers@publicjustice.org.

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