Study: Minimum Wage Workers Ripped Off Even More Than We Thought

Wage theft — employers taking money out of their workers’ pockets — has been estimated to cost society three times as much as all robberies, burglaries, larcenies and motor vehicle thefts combined, according to the Economic Policy Institute (EPI). A 2009 study cited by EPI estimated that in Chicago, Los Angeles and New York City, two-thirds of all wage and salary workers experienced some form of wage theft, and that on average it cost them $2,634 per year out of an annual income of just $17,616.

But according to new data from the Department of Labor, one kind of wage theft — minimum wage violations — may be even more prevalent than previous estimates suggested.

New York Times labor reporter Steven Greenhouse wrote about the results of the study last week.

Greenhouse:

The United States Labor Department says that a new study shows that between 3.5 and 6.5 percent of all the wage and salary workers in California and New York are paid less than the minimum wage.

The study, which examined work force data for the two states, found that more than 300,000 workers in each state suffered minimum-wage violations each month. Labor Department officials said that even if one assumed a violation rate half that nationwide, that would mean more than two million workers across the nation were paid less than the federal or state minimum wage.

Violations were most common in the restaurant and hotel industries, the study found, followed by educational and health services and retail and wholesale.

The minimum-wage violations in those two states translate into $20 million to $29 million in lost income per week, the study concluded. Those amounts represent 38 percent of the income of the victimized workers in New York and 49 percent of the income of victimized workers in California.

The study was based on 2011 data, when the minimum wage in New York was $7.25 an hour and $8 an hour in California. The study found that 11 percent of low-wage workers suffered minimum-wage violations — it defined low-wage workers as those making less than 1.5 times the minimum wage (meaning workers making nearly $11 in New York at the time of the study and $12 in California).

As Greenhouse noted in an interview with public radio’s Marketplace, these thefts don’t hurt workers alone — we all end up paying  in the form of increased usage of public assistance like food stamps and Medicaid.

And there’s more to the story —  read Greenhouse’s whole piece at The New York Times.