Held up at work

May 5, 2014

An epidemic of one particular kind of robbery is taking place across the U.S.--but the perpetrators are rarely charged and almost never punished, reports Gary Lapon.

AN EARLY '80s Saturday Night Live skit featured a news reporter who declared, "[S]tatistics show that in New York, a man is mugged every 11 seconds. I would now like you to meet that man. His name is Jesse Donnally, and he's mugged every 11 seconds." Jim Belushi, playing Donnally, is robbed half a dozen times during the bit that follows.

The skit is funny because of the play on the wording of the crime statistic. But for millions of workers in the U.S., the joke isn't so far from the truth. Except instead of being pickpocketed or held up at gunpoint, these workers are robbed by their employers before they even receive their paycheck.

According to an Economic Policy Institute (EPI) analysis of data from the U.S. Departments of Labor and Justice:

Wage theft is a far bigger problem than bank robberies, convenience store robberies, street and highway robberies, and gas station robberies combined. Employers steal billions of dollars from their employees each year by working them off the clock, by failing to pay the minimum wage, or by cheating them of overtime pay they have a right to receive.

Fight for 15 activists protest the McDonald's All-American Games basketball tournament in Chicago
Fight for 15 activists protest the McDonald's All-American Games basketball tournament in Chicago (Deivid Rojas | Fight for 15)

Yet while those convicted of these other crimes typically face years in prison--as of the end of 2010, nearly 250,000 people were serving time in state prisons in the U.S. for property crimes such as robbery and larceny--wage theft is almost never treated as a criminal offense.

MOST EMPLOYERS guilty of wage theft are never caught, and those that are rarely face significant penalties, let alone criminal charges. According to the EPI, just $280 million in illegally withheld back pay was recovered by the Labor Department in 2012, less than 1 percent of the estimated $100 billion in wage theft each year.

Little is being done to address this massive crime wave, according to the EPI: "Few local governments have any resources or staff to combat wage theft, and several states have closed down or so severely cut back their labor departments that workers are left mostly unprotected and vulnerable to exploitation."

As of 2007, the Labor Department's Wage and Hour Division (WHD) had only "approximately 730 investigative staff...responsible for enforcing employer compliance with labor laws" covering the 54 million low-wage workers who, according to the Government Accountability Office, the WHD considers "most vulnerable to [Fair Labor Standards Act] violations" such as wage theft.

According to the Progressive States Network, the number of investigators working for the Labor Department overall has gone from one per every 10,600 workers in 1941 to one per 141,000 in 2009--"a 13-fold decrease in enforcement capacity since 1941."

By contrast, there were over 460,000 officers in police departments across the U.S. in 2008. The increase in the number of police in the U.S. outpaced population growth from 1992 to 2008, and the prison population has skyrocketed over the past few decades as a consequence of the war on drugs and the rise of mass incarceration.

Similarly, the mainstream media--from local and national news programs to TV shows and films--pay far more attention to robberies and burglaries than to wage theft. In the rare occasions where corporate crime captured the media's attention, it has been because of low-wage workers' struggles against wage theft forced the issue into the spotlight.

These imbalances reflect the class bias of the justice system in the U.S., where the deck is stacked in favor of big business and the rich. As a consequence, poor people and people of color are far more likely to find themselves put behind bars than protected when they are the victim of a crime. This is particularly true when the criminals own a business, especially a big corporation.

THE ECONOMIC Policy Foundation estimates that employers rob workers of $19 billion in unpaid overtime per year--and that is a conservative estimate from "a business-funded think tank." According to Kim Bobo, author of Wage Theft In America, the total amount stolen by bosses from workers each year may be as high as $100 billion. This is over 700 times the total amount stolen in all of the kinds of robberies listed by the EPI, which totaled $140 million in 2012.

Even looking more broadly at the different kinds of criminal theft, wage theft is a much bigger problem. In 2009, according to the U.S. Census Bureau, the total amount lost in robberies, larceny-theft, burglary and motor-vehicle theft added up to less than $15 billion, less than one-sixth the amount that Bobo estimates is lost to wage theft.

Not only is the loot bigger, but wage theft is far more commonplace. According to the FBI, larceny-theft, the most common type of robbery or property crime, affected 2,061 out of 100,000 U.S. residents--about 2 percent of the population.

While statistics on the matter are limited, a 2008 National Employment Law Project survey of over 4,300 low-income workers in New York City, Chicago, and Los Angeles suggests that wage theft is far mare common than most people would guess:

More than two-thirds (68 percent) of our sample experienced at least one pay-related violation in the previous workweek. The average worker lost $51, out of average weekly earnings of $339. Assuming a full-time, full-year work schedule, we estimate that these workers lost an average of $2,634 annually due to workplace violations, out of total earnings of $17,616. That translates into wage theft of 15 percent of earnings.

In many industries, violations appear to be the norm. For example, 66.3 percent of child care workers surveyed reported minimum wage violations and 90.2 percent experienced overtime violations. Some 87.5 percent of home health care workers worked off-the-clock without pay before or after their shift.

Among low-wage workers, certain groups are more vulnerable, according to the NELP:

Women were significantly more likely than men to experience minimum wage violations, and foreign-born workers were nearly twice as likely as their U.S.-born counterparts to have a minimum wage violation...Foreign-born Latino workers had the highest minimum wage violation rates of any racial/ethnic group. But among U.S.-born workers, there were significant race differences: African-American workers had a violation rate triple that of their white counterparts.

Some 47.4 percent of undocumented women surveyed by the NELP reported working for less than minimum wage--nearly three times the rate for U.S.-born women, and fully 84.9 percent of undocumented workers surveyed reported overtime violations.

Other surveys have found similar results. According to a report by the North Carolina Justice Center:

Of 2,660 day laborers surveyed across 20 states and Washington, D.C., 46 percent were completely denied payment by employers in the two months prior to being surveyed, and 48 percent were underpaid during the same time period," and a U.S. Department of Labor survey found that just 26 percent of day care employers in Georgia comply with federal wage and hour law. Surveys of restaurant workers have found that nearly half face overtime violations, and a Department of Labor investigation found that of 50 poultry processing plants randomly chosen, each one "violated the law by not paying for all hours worked.

The workers most likely to face wage theft are the lowest paid and most marginalized, and therefore the least able to afford to lose their pay. Those who stand up against it often face retaliation. Employers take advantage of lax enforcement of labor laws, institutionalized racism and sexism, and the fear of deportation in order to squeeze even more money out of already overworked and underpaid workers.

The impact of wage theft extends further--not only does it hit the specific workers who were ripped off, but it reduces tax revenues. According to the Progressive States Network, in New York state, wage theft causes an estimated loss in tax revenue of over $400 million per year. By comparison, the state budget deficit for the 2012 fiscal year was just $350 million.

In other words, wage theft is a contributing factor toward the budget deficits that are being used to justify austerity--measures that impact the very communities most likely to be victims of wage theft.

WE ALL know that justice isn't blind.

Blacks and whites use illegal drugs at about the same rates, African Americans are 10 times more likely than whites to go to jail for a drug offense. Some people have done hard time for stealing trivial items such as a slice of pizza or candy bars, while bankers guilty of multimillion-dollar fraud are let off with fines, when they are punished at all--because they are deemed "too big to jail."

The lack of enforcement of laws prohibiting wage theft--at every level of government--is another example of this unequal justice.

Fortunately, however, increasing numbers of workers have been fighting back against wage theft--and winning victories. These struggles have merged with broader demands, such as the struggle for an increase in the minimum wage to $15 an hour and attempts by workers' rights advocacy organizations to pass stronger laws against wage theft in several states.

In February, Dave Melton, the owner of several Domino's Pizza franchises in New York City, agreed to pay 61 workers a total of $1.28 million to settle a lawsuit accusing him of wage theft and other violations. This victory took years of struggle to achieve, including solidarity from other low-wage delivery and food service workers facing similar violations of the law.

Also in February, Pennsylvania McDonald's franchisee Andrew Cheung agreed to pay over $200,000 in back wages and damages to nearly 300 workers after the Labor Department found he had violated minimum wage and overtime laws. The settlement came after a strike by guest workers and a campaign by the National Guestworker Alliance, in the context of other job actions by fast-food workers across the country.

Last year, in the midst of protests and strikes at Walmart stores and warehouses, a Walmart subcontractor that manages warehouses in California settled a lawsuit alleging wage theft and unpaid overtime for $4.7 million. Schneider Logistics had also faced strikes by employees in Illinois alleging similar violations.

Wage theft is only an extreme example of the exploitation that is a fact of life for all workers under capitalism, a system based on extracting profits by paying workers less than the value they produce. Not content with making money from workers unpaid labor, capitalists will continue to push the limits in their quest to maximize profits--whether or not that means violating the law.

Even with stronger laws on the books in states such as New York and Illinois, workers will need to keep up the pressure to stop the business pickpockets and win back pay after the fact.

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