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