A report from Temple University’s Sheller Center for Social Justice titled “Shortchanged: How Wage Theft Harms Pennsylvania’s Workers and Economy.” details rampant wage theft in Pennsylvania and decsribes how it affects workers, businesses, and the public.
The report estimates that employers steal $19 million to $32 million from workers weekly. Among low-wage workers the problem is even greater. They see 15 percent of their paycheck stolen by employers on average.
The problem is particularly heinous in the Philadelphia metro region where each week an estimated 128,576 workers experience a minimum wage violation, 105,458 experience an overtime pay violation, and 83,344 experience an off-the-clock violation. From the report:
“Wage theft is not insignificant or uncommon. It occurs across a broad range of industries, including construction workers, fast food workers, caregivers for children and the elderly, factory workers, restaurant staff, cashiers and office clerks. Its victims include men and women of every race and nationality. It affects both U.S. citizens and undocumented immigrants. Yet the problem of wage theft is generally hidden or unknown.”
One main driver of wage theft is a lack of enforcement, partially due to lax laws and a lack of funding for enforcement agencies. Although Pennsylvania has a Minimum Wage Act (MWA) and a Wage Payment and Collection Law (WPCL), neither has the teeth to deter businesses from committing crimes. The WPCL is particularly weak, with workers entitled to a maximum of $500 or 25 percent of the wages owed, whichever is greater. Employers who violate the WPCL can receive a maximum $300 fine or 90 days imprisonment.
The Bureau of Labor Law Compliance is in charge of enforcing the WPCL and MWA, but “does not have sufficient resources to enforce the current wage and hour laws,” the report suggests. They top out at roughly 5,000 closed cases annually but “manage to collect wages in only about 2,000 of the cases on behalf of workers.”
The report also notes the effect that wage theft has on the economy. Pennsylvania is facing budget deficits and tackling wage theft in a comprehensive manner would bring in revenue simply by enforcing existing laws:
“Every dollar taken from a Pennsylvania worker is a dollar unspent in the local economy. When workers are unable to spend money on needed goods and services, Pennsylvania’s businesses miss out. Further, when employers evade paying wages, Pennsylvania loses out on state income tax revenue … money (that) could be used to fund schools, improve roads and provide much-needed services to Pennsylvania citizens.”
The report recommends remedies for wage theft, including strengthening current laws, creating new laws that target employers who knowingly steal from their employees, and increasing funding to the labor department. Temple University law professor Jennifer Lee, who oversaw the creation of the Sheller Center report, added:
“Strengthening our laws addressing wage theft is certainly the most significant but there are also non-legislative changes that could also help to address this problem. For example, the Department of Labor and Industry could do things that could improve the efficacy of their enforcement program that would not require a change in law.”
Read the 52-page report in its entirety via Temple University.