More than 300,000 wage and salary workers in California and New York are victims of wage theft, according to a new study by the U.S. Department of Labor.
The study examined data from the two states and found that between 3.5 and 6.5 percent of workers in those states were paid less than the state or federal minimum wage. Service industry workers were the most likely to experience wage theft, specifically in the restaurant and hotel industries.
The lost wages in those two states represent $20 million in lost income per week in New York and $29 million in lost income per week in California. Even if the number of workers that experience wage theft is only half of that in the two states studied, that means that more than two million workers across the nation are victims of wage theft.
The study also found disparities in who experienced wage theft across gender and race. Women were more likely to experience wage theft than men, and people of color were more likely to experience wage theft than whites.
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One of the largest disparities was between citizens and non-citizens. While the data did not include information on the numbers of undocumented workers who experienced wage theft, the study found that in California, non-citizens were 1.6 times more likely to experience wage theft. Non-citizens in New York were 3.1 times more likely to experience wage theft.
Steven Greenhouse, labor and workplace reporter for the New York Times, told Marketplace that many of the people experiencing wage theft are undocumented. “Perhaps these numbers actually understate the problem,” Greenhouse said. “When the Census Department does its survey, it generally under-counts and under-interviews [undocumented workers].”
Greenhouse reported for the New York Times this year that more and more workers are taking employers to court, and accusing them of wage theft. David Weil, the administrator of the Department of Labor’s Wage and Hour Division, told Greenhouse that changes in business practices are driving the surge in wage theft.
“We have a change in the structure of work that is then compounded by a falling level of what is viewed as acceptable in the workplace in terms of how you treat people and how you regard the law,” Weil said.
The study concluded that wage theft is associated with increases in the number of families and individuals in poverty, increasing the amount of public assistance needed. The economic burden, in the end, is largely shifted from the private sector to the government.
An additional $15.6 million in California and $7.8 million in New York was spent on school breakfast and lunch programs due to minimum wage violations. Monthly food stamp benefits were increased by $857,900 in California and $2.8 million in New York due to minimum wage violations.
“These findings are alarming in terms of the prevalence of the problem, particularly in a set of industries where we already know workers earn low wages and struggle to earn a basic family budget,” Weil told the New York Times in response to the new study.
While the prevalence of wage theft throughout the United States is unknown, the Economic Policy Institute estimates that the total amount of money recovered in 2012 for the victims of wage theft was at least $933 million.
The study was conducted for the Department of Labor by the Eastern Research Group, which provides research services in various areas for dozens of federal and state agencies.
This is not the first study to show that wage theft is prevalent throughout the country. A study conducted in 2009 by the Center for Urban Economic Development examined data from Los Angeles, Chicago, and New York, and found that 26 percent of low-wage workers were paid less than the minimum wage in the week prior to the survey.
The study was based on data from 2011, when the minimum wage was $7.25 per hour in New York and $8 per hour in California. The minimum wage is now $8 per hour in New York and $9 per hour in California. The current federal minimum wage is $7.25 per hour.
While Congress has taken no action to raise the minimum wage, voters across the country have approved raises to the minimum wage, as the measure has continually netted across-the-board support from voters.
In Alaska, Arkansas, Nebraska, and South Dakota, voters approved increases to the states’ minimum wage in November. The Chicago City Council recently approved raising the minimum wage from $8.25 per hour to $13 per hour by 2019.
Low-wage and fast-food workers have been organizing labor strikes in recent months in nearly 200 cities across the country. Workers are demanding a minimum wage of $15 per hour and the right to form a union.