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PARRAMORE: On Average, Workers Lose $2,634 a Year to Wage Theft

A deep look into American wage theft from AlterNet writer Lynn Stuart Parramore provides an enhanced view of the problem plaguing workers today. Published as part of a series titled, “The Age of Fraud,” the piece looks into the details of how wage theft occurs and what protections there are (or aren’t) for workers.

Parramore dubs wage theft the “Invisible Epidemic That’s Sweeping the Nation.” It is to be expected that in our imperfect world some employers will attempt to cheat their workers in the name of lowering labor costs and raising profits. However, as this piece explains, a few rogue businessmen doing the wrong thing is not the reality. Rather, wage theft is ingrained into the workplace, an unfettered business practice that due to lack of legal protections is nothing short of pervasive:

The sheer scope of the problem is jaw-dropping, sweeping across key industries and inflicting massive damage on individuals and society as a whole. In 2009, the National Employment Law Project (NELP) released a ground-breaking study, “Broken Laws, Unprotected Workers,” which found that in America, an honest day’s work is frequently rewarded with theft and abuse. A survey of over 4,000 workers in Chicago, L.A. and New York found that minimum and overtime violations were rife, and any attempt to complain or organize was swiftly met with punishment. Among the revelations:

• 26 percent of low-wage workers got paid less than the minimum wage.

• 76 percent of workers toiling over 40 hours were denied overtime.

• Workers lose an average of $2,634 a year due to these and other workplace violations.

Brutally, those earning the least money are most frequently the targets of wage theft. Exploitation is inversely proportional to wages. Parramore laments our culture’s acceptance of wage theft as a “norm”:

The world of work in America has fundamentally changed in the last 30 years, and not for the better.

In her paper, “Picking Pockets for Profit,” Susan Miloser traces a struggle for protection that began over a century ago with the public outcry over brutal workhouses where recent immigrants, women and children were paid substandard wages. Massachusetts was the first state to enact minimum wage legislation in 1912. Then came the Great Depression, and President Franklin Roosevelt responded with New Deal legislation that included the Fair Labor Standards Act pushed by his labor secretary, Frances Perkins. One of the key things the Fair Labor Standard Act did was ensure a minimum wage under the theory that wages were subject to something economists call “market failure.” The idea is that you, as a worker, are at a serious disadvantage compared to your boss when negotiating your wages. So the government has to intervene to correct this failure of the market and create a more level playing field.

The act also made provisions regulating payment for overtime. Employers who violated the law could be sued for back pay and damages. Roosevelt insisted that businesses that violated fair labor standards were toxic to the economy: “Goods produced under conditions that do not meet rudimentary standards of decency should be regarded as contraband and ought not to be allowed to pollute the channels of interstate trade,” he said. Roosevelt, we may assume, would frown on shopping at Walmart.

Clearly, the New Deal has somehow transformed into the Raw Deal. Since the rise of Ronald Reagan, the American workplace has been morphing from a relatively level playing field into a theater of exploitation. This process has been aided and abetted by influential economists known as “free-market fundamentalists,” who dominate the Ivy League and policy circles. They have convinced policy makers and politicians that a voluntary system magically guided by an “invisible hand” produces outcomes that are good for most people. In their view, the economy is a system of equal exchanges between workers and employers in which everybody who does her part is respected and comes out ahead. Obviously, they don’t focus their research on labor: they may talk about unemployment or wages – keeping the former high and the latter low — but the conditions workers face are completely off the radar of these economists. (If you’d like to see how this kind of thinking plays in the mainstream media, take a gander at a recent post by Slate’s Matt Yglesias: “Different Places Have Different Safety Rules and That’s OK.”)

Here’s where we are: the twin evils of high unemployment and economic inequality have joined forces to turn workers into so many expendable units in the great capitalist machine. Union-busting, globalization, outsourcing, downsizing, and recession have turned dignified jobs into opportunities for employer predation.

The question becomes how do we change the environment that has allowed such abuses for so long? Parramore suggests a lack of reporting on actual wage theft (Hey, Lynn! Check out our WAGE tag!), combined with the Department of Labor’s underfundedness contribute to the problem. If workers had a channel to find retribution, businesses would have to change their policies:

The Department of Labor is supposed to enforce fair labor practices, but budget cutting at the insistence of Big Business has had the desired effect. Currently, there are only 1,000 enforcement officers protecting 135 million workers. That would be enough to cover, say, the city of Chicago. Maybe! You can place a claim through the department, but you may not get results. Workers are often left to fend for themselves.

Parramore’s relatively long read is highly recommended. For more on the subject check out her other pieces in “The Age of Fraud” series.


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