Third Party & Independents Archives

Employer Wage Theft Has Reached 'Epidemic' Levels

Does the phrase “wage theft” sound like something that would land an unscrupulous blue- or white-collar employee in either the unemployment line or prison? If so, it’s time to set the record straight.


Wage theft is a two-way street, and what we're discussing today is what happens on the employer side of thing: it turns out that American employers, cumulatively, steal about $3 billion from workers each year in the form of withheld wages or denied benefits--in other words, remuneration that is both legally and ethically owed to the employee.

This information comes to us from the Economic Policy Institute, a liberal think tank based in Washington, D.C. that advocates for low- and moderate-income families.

This comes at a time when American wages have been effectively stagnant for decades, and millions of Americans are struggling to make ends meet even while working one or more full-time jobs. And yet, it's a problem that continues to go unaddressed.

What Does Wage Theft Look Like?

Part of the reason why wage theft goes unnoticed--and unpunished--most of the time is because it typically involves small sums of money at a time. The phrase "nickel and dimed" is appropriate here; classic examples of wage theft include failure to pay employers for time spent preparing their work areas in the morning or, in the case of Amazon's famously overheated, overcrowded, and generally unpleasant warehouses, failing to pay employees for standing in line at metal detectors on their way out of the facility--a situation that exemplifies another phrase: "adding insult to injury." Sadly, the Supreme Court ruled against Amazon's workers.

Indeed: that American workers are denied basic dignities is no secret; workers in other developed nations enjoy paid sick leave, paid family leave, and paid vacation leave at a rate heretofore unheard of here in the States. In the US, however, we're told that these are pipe-dreams: unrealistic goals that would cripple our economy and stifle innovation. This is a lie.

Don't believe me? In a report by the International Labor Organization, it was found that only two countries deny their workers paid maternity leave: the United States and Papua New Guinea. That's it. We stand virtually alone in our belief that our economy would suffer if we treat expectant mothers (for example) with the respect they're owed.

A Redistribution of Wealth

But back to wage theft. Let's take a look at some real-world math to really frame the problem.

In the case of a minimum wage worker ($290 per 40-hour work week), a loss of just thirty minutes from each paycheck would amount to an annual shortcoming of more than $1,400--an unacceptable state of affairs, considering how many of these workers are already at or below the poverty line.

What we're really looking at is a redistribution of wealth--it just happens to be a different sort than the "evil socialist ideals" you hear bandied about by Fox News, their affiliates, and their preferred presidential candidates. This sort of wage theft is nothing more than corporate boardrooms lifting money out of the pockets of their workers and placing it in their own. They've simply gotten better at hiding it.

If you're following along, you recognize that this is just one more cause of America's criminally high levels of income inequality--a situation that has worsened steadily and dramatically since 1970, and which, once again, places the United States in a league of its own among the world's other civilized nations.

Putting Things in Perspective

What I've described above is fairly abstract--again, we're talking about something that happens in small amounts and, in some cases, goes unnoticed entirely. So let's put things in perspective:

If you were to account for every motor vehicle theft, every robbery, every burglary, and every case of larceny that occurs in the US each year, the total price tag would come to $14 billion. The $3 billion loss we attribute to employer wage theft is a full $21% of that total.

Yet, we consider only the first type of robbery to be a "criminal" act. The other is "business as usual."

But the worst part of this situation is that nobody really seems to know how many cases of wage theft happen in the US in a given year. What we do know is that the funds recovered in 2012 from reported cases of wage theft totaled $933 million--a figure that more than triples the sum stolen in conventional robberies that year. And this is to say nothing of the cases that are never reported at all.

A Problem in Search of a Solution

The first solution is obvious: Congress needs to implement more effective worker protections. President Obama requested an additional 300 investigators to add to the Wage and Hour Division of the Department of Labor. It's a good start, but not nearly enough.

Also overdue is an amendment that would put an end to federal contracts to companies found guilty of wage and/or hour violations.

But there's another issue here, and it goes to the heart of company culture in America. Historically, discussing wages and salaries--either within the workplace or without--has been, at best, a taboo, and at worst grounds for dismissal. This has only worsened current trends in wage fairness, since nobody was allowed to discuss the problem openly.

Thankfully, Section 7 of the National Labor Relations Act affords American workers the right to discuss matters of remuneration with either colleagues or people outside the company, whether or not they belong to a union. Employers see this as a threat, and well they should.

As we've seen in countless other places in the world and countless other times throughout history, simply giving workers a voice is the first step toward recovery--and make no mistake, this will be a long recovery.

Posted by DFaris at May 27, 2015 2:45 PM
Comment #395754

I disagree with the court ruling against Amazon workers. If it is a mandatory function of the job to stand in line and get searched then the employer should pay them for that time. It’s in the job description, they are paid to do the job. The court is wrong on that account.

I do think it’s strange that, this being a free country and the most precious right is the right to free speech, that there must be laws passed that “affords American workers the right to discuss matters of remuneration with either colleagues or people outside the company”.

That just has things turned on their head. That’s like saying the first amendment doesn’t exist and a law is needed to replace it.

As far as parental leave goes. I’ve heard women crowing for 30+ years that childrearing and homemaking is a job. What employer should be forced to pay an employee to work somewhere else? If the employer contracts with their employees and includes parental leave, fine. But to classify a lack of a contract between 2 parties as a crime is going overboard.

Posted by: Weary Willie at May 27, 2015 3:41 PM
Comment #395755


It’s official — federal agencies can now require that contractors be unionized to bid on large federal construction projects. A ruling sent down by the White House finalized an Executive Order President Obama signed February 6, 2009, which promotes the use of Project Labor Agreements (PLAs) on federal contracts costing $25 million or more.

This act served to revoke the Bush executive orders 13202 and 13208 from eight years earlier that prohibited government-mandated PLAs on federal and federally funded construction projects.

Non-union company tax-paying employees apparently are not good enough to work on a project that is funded by their taxes. This is essentially theft of wages by executive order.

Posted by: Royal Flush at May 27, 2015 4:02 PM
Comment #395756

Why would you need a union to negotiate a PLA? Couldn’t non-union shops negotiate their own PLA, satisfying the bias, favoritism, and descrimination aspects of government mandates?

Posted by: Weary Willie at May 27, 2015 4:26 PM
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