Stealing Wages

wage theftBy GREGORY N. HEIRES

Retailers bemoan the estimated $14.4 billion they lose each year to shoplifting.

What they don’t like to acknowledge is that they steal more than that amount—an estimated $15 billion—by paying their workers less than the minimum wage.

Employers go to great lengths to combat shoplifting and other forms of theft, spending more than $8.9 billion in 2015 on the effort.

They install camera security systems, employ guards to monitor shoppers, and attach anti-theft devices to their sales items. They may have interrogation rooms to dress down alleged shoplifters and penalize them without calling the police.

Retailers invest 39 percent more on fighting shoplifting than the U.S. Dept. of Labor spends to enforce the minimum wage, according to a wage theft, “The Steal: The Urgent Need to Combat Wage Theft in Retail,” by Any Traub, associate director of policy & research at Demos, which promotes greater equality in the economy.

Minimum wage workers can only expect less support from the federal government with the Trump administration’s proposed 21 percent cut in the department’s budget. The budget would reduce the wage enforcement staff by more than 40 percent. (So much for Trump’s campaign promise to improve the lot of low-wage workers.)

For the most part, employers don’t have to worry about stiff penalties for illegally undercutting the pay of their employees.

“Shoplifters can wind up in jail, but federal penalties for wage theft are not much of a deterrent, even when millions of dollars are stolen,” Traub says.

Employers generally don’t face criminal charges in wage theft cases. Typically, employers caught stealing from their employees must only pay damages and restore the lost pay.

On the other hand, shoplifters face felony charges if they are convicted of stealing more than $2,500. In New Jersey and Virginia, convicted shoplifters can be sent to jail for stealing as little as $200 in merchandise.

Wage theft carries a significant social cost. Taxpayers must assume the cost of providing public assistance to affected workers and their families.

An estimated 4.5 million minimum wage workers and their families are victims of wage theft each year, according to the Economic Policy Institute. The loss of income causes 302,000 families to fall below the poverty line. Some 358,000 retail minimum wage workers are cheated every year.

Annually, the country loses up to $2.5 billion in payroll and income tax revenue because of violations of minimum wage laws. Minimum wage violations in the retail industry amount to $429 million.

Greatest Perpetrator: Walmart

Perhaps the greatest perpetrator of wage theft is Walmart, the nation’s largest private-sector employer.

Between 1998 and 2006, Walmart cheated its workers in Pennsylvania out of $49 million, according to court rulings. The retail giant did this by forcing employees to work off the clock and skip meal breaks. After filing complaints for 14 years, workers were finally compensated.

“A similar pattern emerges around the country,” Traub says.

Workers at three of Walmart’s warehouses in Southern California won $21 million to compensate them for unpaid overtime and other wage violations. The retailer was found to have paid 900 delivery truck drivers less than the minimum wage.

U.S. Sens. Sherrod Brown and Patty Murray and U.S. Rep. Rosa DeLauro introduced legislation in 2016 that would require triple back pay for victims of wage theft. Unfortunately, the bill is very unlikely to pass in the Republican-controlled U.S. Congress.

So, for at least the remaining three years and a half of Trump’s term in office, cheated workers will have to hope for better enforcement by states and municipalities.

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