Pennsylvania’s low-wage workers lose between $19 million and $32 million to wage theft in any given week, potentially costing the state’s economy as much as a billion dollars in lost potential consumer spending each year, according to a new analysis by law students from Temple University.
The economic analysis is premised on a 2009 study of Chicago, New York, and Los Angeles workers’ experiences of wage theft in various industries. Extrapolating from those findings — because “there is no reason to believe that Pennsylvania employers comply with wage and hour laws more than employers elsewhere” — the law students estimate that almost 400,000 individual low-wage workers get paid less than the minimum wage in any given work week. Over 326,000 work unpaid overtime, and more than a quarter-million perform off-the-clock work.
At the average wage losses reported in the 2009 study, Pennsylvania workers are losing tens of millions of dollars each workweek. If the low-end estimate of $19 million stolen in any given week were consistent across a whole year, that’s roughly a billion dollars annually in unpaid work and unrealized budget flexibility for working families statewide.
The actual annual figure may be lower, as the weekly estimates that past research allowed the Temple study to make are not necessarily occurring every single week. However close to that billion-dollar annual figure the real number is, every dollar of lost income for workers means lost commerce for the places those workers shop. The damage to economic activity and sales tax collections from this siphoning-off of worker wages into business profits amplifies the overall damage to Pennsylvania’s growth.
The students also interviewed numerous workers who have had their wages stolen by their employer, including a homecare worker named Natasha. Natasha’s company “regularly refused to pay for her travel time between clients” in disparate Philadelphia neighborhoods. The study notes that past landmark studies of wage theft estimated that nine out of every 10 homecare workers are forced to work off the clock in this fashion.
When a trucker named David started seeing paychecks for less than he was owed, he trusted his boss’ assurances that he’d get his back pay down the line. When the boss didn’t keep his promise, “the bills started to go up, ’cause I couldn’t pay them off, that’s when I said enough is enough” and quit, David told an interviewer.
Pennsylvania’s wage theft laws are fairly weak, with maximum penalties for an employer found guilty of wage theft capped at just a few hundred dollars. That structural weakness is compounded by poor enforcement. Pennsylvania Department of Labor and Industry records indicate the state fails to collect back wages more than half the time that a complaint is even brought to them, the study said.
Such failure to protect workers is common even in places where wage theft laws are more stringent, like California. Just 17 percent of workers who prove a wage theft claim before the proper authorities ever get their money, in part because 60 percent of companies that lose a wage theft case simply fold rather than paying what they owe.
The difficulties in enforcing wage theft laws administratively have inspired more tenacious policies in other jurisdictions. If you’re found guilty of stealing wages in Houston, Texas, the city will void any contracts you might have with taxpayers. If you’re then found criminally liable for the theft, rather than demonstrating that it was an innocent error, the city will also suspend your business license — the labor law equivalent of deportation.
More money gets stolen through employer wage theft each year than the combined total haul of every store holdup and bank robbery in America. The epidemic has received growing attention in recent years as a number of cities and states seek to toughen their wage laws, and as low-wage worker activism in fast food and other industries has brought greater awareness of the routine rights violations that the economically vulnerable experience when they go to work.