Constant And Widespread Wage Theft Is A Symptom Of Our Broken Economy
Wage theft is rampant and massive in this country and on a scale that most people seem blissfully unaware of. According to the Economic Policy Institute, it is estimated that workers lose anywhere from $40 billion and $60 billion each year simply due to wage theft. That is potentially more than triple the combined value of all robberies, burglaries, larcenies, and auto thefts that are committed every year. In other words, businesses are by far and away the largest and most effective criminals in our country.
Wage theft is similar to the hidden fees that banks and telecoms have used for years to boost their own bottom lines. While the amounts that are stolen from each individual may not be much in absolute terms, when multiplied across hundreds, thousands, and millions of customers and workers, it adds up to some serious money. Much of the theft involves paying workers below the minimum wage or forcing them to work extra hours without pay. A more complicated tactic is to simply misclassify workers so they are not subject to overtime pay. Along the same lines is the strategy to simply treat employees as independent contractors or subcontracted workers so that the business would have virtually no responsibility at all for their treatment or payment.
(As an aside, the Obama administration tried to deal with the issue of misclassification and unpaid overtime with new rules that dramatically raised the base salary at which overtime ceased to be paid, a level that had not changed in over 40 years. Forty years ago 65% of American workers received overtime pay. Two years ago, when Obama instituted the change, that number had decreased to 7%. Needless to say, that new overtime rule which would have given millions more American workers more overtime pay was blocked in an unprecedented ruling by a partisan Republican judge and then dropped entirely by the Trump administration.)
Financially strapped workers, those who rely on tips, service workers, and day laborers are especially vulnerable to wage theft. And that wage theft tends to put downward pressure on workers for companies that actually do obey the law. Trump Tower itself was built in 1980 with illegal workers working for less than half the union wage and putting in 12 hour shifts without receiving overtime pay. In fact, the contractor Trump used stopped paying the workers entirely and work ceased until Trump himself promised to pay them. The workers were paid, often in cash, thereby allowing Trump to avoid paying over half a million dollars into the welfare fund.
That was in 1980. Today the New York Times is reporting that the District Attorneys in all five boroughs of the city, along with the state, have begun a coordinated crackdown on wage theft in the construction industry. This year, the DAs have brought indictments that outlined over $2.5 million in wage theft from just 400 construction workers. That is just a drop in the bucket compared to the total amount of wage theft that experts believe occurs in the state. According to a report from the US Department of Labor, New York State workers lose between $10 million and $20 million each week due to wage theft. That potentially means that business are stealing over $1 billion each year from the state’s workers. That’s $1 billion in profits for these businesses basically stolen from workers.
Now, you may say that’s just the notoriously corrupt New York Construction industry. But it extends deeply into most service industries and some of the our most well-known companies, such as Walmart, McDonalds, Dominos, and Uber. Many of these firms are not only repeat offenders but have put in place sophisticated systems seemingly specifically designed to steal from their own employees.
The fancy new sushi restaurant that is scheduled to open up in Trump’s DC hotel has just been hit with its own lawsuit charging wage theft. According to the Washington Post, Sushi Nakazawa, the New York restaurant with chef Daisuke Nakazawa, and its owner, Alessandro Borgognone, were charged in a class-action wage lawsuit with allegedly not paying the minimum wage and misappropriating tips. “They are accused of improperly distributing tips earned by plaintiffs Treva Willis and Melissa Avis, and other employees. The suit, first reported by Grub Street, also calls out the restaurant for allegedly failing to pay the legally required minimum wage and overtime, and reportedly failing to provide required wage notices.”
If wage theft wasn’t bad enough already, the Trump administration is about to make it much easier, again at the expense of tipped workers. A new Department of Labor proposal would allow employers who pay workers more than $7.25 an hour to collect any tips those workers receive and pool them to be distributed in any way the employer sees fit, including having the owner simply pocket those tips and give the workers nothing. This is essentially part of what Sushi Nakazawa was doing.
Although not restricted to simply the US, income inequality in this country has exploded in the last 30 or 40 years. Much of that is due to the effects of globalization and technology which simultaneously created an explosion in the numbers of low-wage laborers around the world along with a huge reduction in the time and cost of the delivery of goods. Most of the benefits of this phenomenon have gone to the global investor class, primarily at the expense of workers. Here in the US, the decline of unions has, to a lesser extent, contributed to declining pay and worker protections, further driving down wages. More importantly, however, the continued and repetitive nature of wage theft, especially in the service industries, shows just how much are supposed market-driven economy is actually powered by constant, individually small, but pervasive and widespread criminality.
