Wage Theft Victimizes Workers and Communities

A report on wage theft in Pennsylvania issued by Temple University in June revealed that employers are stealing up to $32 million from Keystone State workers each week. 

Temple University’s Sheller Center for Social Justice used a 2009 national study to estimate the extent of violations in Pennsylvania.  The report, “Shortchanged: How Wage Theft Harms Pennsylvania’s Workers and Economy,” estimates that 397,673 low-wage workers in Pennsylvania suffer pay violations weekly.   

Wage theft occurs in many ways.

One common practice is for companies to shortchange workers by not paying for overtime hours or for every hour worked. This can add up fast. If a minimum wage worker is cheated out of a mere half hour of wages each day, the worker loses up to $1,400 every year, or a little more than 9 percent of annual income.

Some employers cheat workers by deducting from their paychecks for contrived violations in the workplace. This often results in workers receiving less than minimum wage, which is illegal whether violations actually occurred or not.

Employers will also misclassify workers’ as independent contractors in order to pay them less and to evade tax payments.

Both workers and the economy are victims when wage theft goes unchecked.

When workers are paid less than they deserve, they in turn pay less in income taxes. This is money that would have gone towards funding schools, roads and other government services. Losing those tax dollars hurts the whole community. 

Wage theft also damages businesses that play by the rules and pay workers fairly. These businesses are disadvantaged as they try to compete with companies that reduce their costs by stealing from employees. 

Finally, minimum-wage workers are some of the economy’s most important consumers, spending a large percentage of their paychecks on essential items like food and clothes. When these workers have less to spend, the stores where they would shop get less business.

Nationally, minimum wage workers are losing 15 percent of their income to wage violations according to the survey from Broken Laws, Unprotected Workers.

The federal Fair Labor Standards Act prohibits wage theft but the Department of Labor lacks sufficient resources to investigate and prosecute the multitude of cases across the United States.

That leaves enforcement to cash-strapped state governments. As a result, too many employers get away with wage theft.

Governments, both federal and state, must prioritize investigation and prosecution of this crime.

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Posted In: Union Matters

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