September 8, 2009

Study reveals widespread labor law violations for low-wage workers

According to the Department of Labor's site on the history of Labor Day, the holiday is a yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country. But for low wage workers, there isn't much to celebrate this holiday. A 2008 study of 4,387 workers in low wage jobs in Chicago, Los Angeles and New York - Broken Laws, Unprotected Workers (pdf) - revealed widespread violations of basic wage and labor laws. These violations affected all worker, regardless of legal status, race, or gender. The study found numerous violations of minimum wage and overtime laws; workers who log hours without being paid for their time; workers who are denied earned breaks and meal time; charges illegally deducted from worker pay; retaliation by employers for complaints; and denial of workers' compensation benefits, including encouraging employees to commit fraud.

Nearly two-thirds of all workers surveyed had experienced a wage violation in the week prior to being interviewed. About one in four had been paid less than the minimum wage the week before being surveyed; about one in seven had worked off the clock; about three in four who had worked overtime were not paid the proper amount.

Stating that the workers' comp system is not functioning in the low-wage labor market, the report's executive summary noted the following:

    Of the workers in our sample who experienced a serious injury on the job, only 8 percent filed a workers' compensation claim.
  • When workers told their employer about the injury, 50 percent experienced an illegal employer reaction -- including firing the worker, calling immigration authorities, or instructing the worker not to file for workers' compensation.
  • About half of workers injured on the job had to pay their bills out-of-pocket (33 percent) or use their health insurance to cover the expenses (22 percent). Workers' compensation insurance paid medical expenses for only 6 percent of the injured workers in our sample.

The economic toll
Study authors call these violations wage theft and paint a grim picture of the economic toll that these violations impose on the workers and on the communities at large. The average worker lost $51 from an average weekly earnings of $339, or about 15%. 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.

Survey authors estimated that approximately 1,114,074 workers in the three cities combined experience least one pay-based violation per week. Extrapolating from this figure, front-line workers in low-wage industries in Chicago, Los Angeles and New York City lose more than $56.4 million per week as a result of employment and labor law violations.

When impacted workers and their families struggle in poverty and constant economic insecurity, the strength and resiliency of local communities suffer. When unscrupulous employers violate the law, responsible employers are forced into unfair competition, setting off a race to the bottom that threatens to bring down standards throughout the labor market. And when significant numbers of workers are underpaid, tax revenues are lost.
The report recommends three principles that should drive the development of a new policy agenda to protect the rights of workers:
  • Strengthen government enforcement of employment and labor laws
  • Update legal standards for the 21st century labor market
  • Establish equal status for immigrants in the workplace

| 3 Comments

3 Comments

Julie:

I agree that it is a crime when these wage violations take place. It is neither right nor fair.

None of these employees are required to stay at their job. This country is a country of equal opportunity and not equal outcome. They are free to seek other employment from companies that don't cheat their employees. They are also free to complain to the Federal and State authorities. The solution to this problem is education, both for the employees and the employers. Many employers are ignorant of payroll laws. Believe me payroll is my business. Yes many others attempt to create an illegal advantage in the marketplace by cheating their employees. It normally does not last very long.

As far as illegal immigrants, I have made my views known before. They need to get legal or go home. To many criminal people take advantage of their illegal status and the best way to stop that is not have any illegal workers, period.

The schools in this country should be educating children on their rights in the work place. Believe me they don’t. Until recently I taught Introduction to Business at a local High School as a volunteer. The schools don't teach the real world in anymore. Not in workplace environment, not in civics, not in government much of the time they don't even teach the kids to read. If they can't read they can't read the employment law posters. In 20 years of payroll I have never seen an employment law poster audit!

We don't need more laws. We need an educated workforce and enforcement of the laws, including immigration, which are already on the books.

Charles Read

This sounds like a classic "find some facts to reinforce your preconceived outrage" sort of study. Did the study also consider how many of the "exploited" workers would have no job at all (and pay no taxes at all), if their employers were forced to follow all the rules to the letter? Even a $17,000 wage, cut by "wage theft" to $15,000, is better than no wage at all, which would be the real alternative for many of those jobs. What the article describes is a classic "black market" that develops when the "official" market imposes excessive costs. And by the way, the money that employers save by "wage theft" also goes back into circulation, giving other people work who would otherwise remain unemployed.

The headlines WAY outweigh the actual study... The researchers (NONE of which have any workers' compensation credentials) have essentially documented what we knew all along - undocumented workers and others in the "fringe economy" are often paid under the table and are not reported to insurance carriers by their employees. So the conclusion really is that people who have been wrongfully excluded from the system are treated poorly by the system they are excluded from.
I'm not condoning the outcome or the employer behavior that creates it, but it's a shame the researchers went for cheap headlines that have been overgeneralized by some media outlets (other than here)
Bob Aurbach

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This page contains a single entry by Julie Ferguson published on September 8, 2009 12:16 PM.

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