Kevin Abels recently authored a piece for The Huffington Post describing how wage theft problems need to be fixed both through education and by changing government agencies to better deal with it.
Wage theft occurs when employers do not correctly pay workers what they are owed. It often comes in the form of making employees work off the clock, paying below the minimum wage, failing to pay workers overtime or ignoring the prevailing wage. Wage theft often happens to low-wage workers who are already struggling to get by.
Wage theft hits low wage workers hardest. A 2009 study found that an incredible 76 percent of low wage workers in our nation’s largest cities claimed they had been underpaid or not paid at all.
Still, wage theft is everyone’s problem. The Economic Policy Foundation found that U.S. workers annually lose $19 billion in earnings due to unpaid overtime alone. Imagine what $19 billion in additional wages pumped in our economy could do right now. Imagine what income taxes paid on that $19 billion in unpaid overtime could do for our federal and state budgets. In 2010, New York State a loss of $427 million in state revenue.
When employers fail to pay workers correctly, the state loses revenue and burden is shifted to working families and government programs. Many states have programs to help monitor wage theft but they are often underfunded and unable to keep up with the large work load.
Victims of wage theft often find themselves without effective recourse. Over 5,200 employees contact the Colorado Department of Labor every year about wage and hour violations; however, there are only a few employees to address these wage theft cases and the other 30,000 cases a year they are responsible for. In Oregon, due to budget cuts, the state has reduced its investigators from five to two. Colorado also has an anachronistic 60-day window to submit a wage claim letter; workers who do not file these letters within the two month period of no hope of recovering their wages.
Abels points to Illinois as a state which has taken innovative measures to help fight wage theft.
Last year, Illinois passed a law to improve its wage theft enforcement system. One critical piece of this landmark legislation was a fee structure that allows the Illinois Department of Labor to retain some of the wages and penalties it recoups in order to fund further investigation and enforcement. Already this provision has supplied $58,000 for the department, almost enough to hire an additional full time employee. This helps prevent another Oregon from occurring in Illinois. And Colorado is looking to follow Illinois’s lead, by passing a wage theft law that funds investigation, enforcement, and community education and eliminates the 60 day window, among other provisions.