Wage Theft Affects Millions of US Workers


Whether you’re a gig worker or permanent and full-time, wage theft – the denial of wages or employee benefits that are rightfully owed to an employee – can be a serious issue. In fact, according to the Economic Policy Institute’s (EPI) latest report, “Employers steal billions from workers paychecks each year,” millions of working Americans are regularly shortchanged.

While the EPI report focuses on minimum wage workers, the gig economy is no stranger to wage theft. In fact, the Freelance Isn’t Free Act – a new law in New York City, spearheaded by the Freelancer’s Union, that establishes and enhances protections for freelance workers – contains provisions to fight against wage theft. Specifically, the law states: “Once a freelance worker has commenced performance of the services under the contract, the hiring party shall not require as a condition of timely payment that the freelance worker accept less compensation than the amount of the contracted compensation.”

As the EPI report notes, wage theft ends up affecting all workers as it puts a downward pressure on wages across the board, not to mention the negative affects on state and local economies.

While the report helpfully catalogs the abuse of wage theft, it also offers solutions, calling for the “strengthening of states’ legal protections against wage theft, increasing penalties for violators, bolstering enforcement capacities, and protecting workers from retaliation when violations are reported.” If the specific needs of indy workers are also considered part of these suggestions, they form a robust response to the problem of wage theft.

The report presents the following key findings, but make sure to check out the entire thing here:

“In the 10 most populous states in the country, each year 2.4 million workers covered by state or federal minimum wage laws report being paid less than the applicable minimum wage in their state—approximately 17 percent of the eligible low-wage workforce.”
“The total underpayment of wages to these workers amounts to over $8 billion annually. If the findings for these states are representative for the rest of the country, they suggest that the total wages stolen from workers due to minimum wage violations exceeds $15 billion each year.”

“Workers suffering minimum wage violations are underpaid an average of $64 per week, nearly one-quarter of their weekly earnings. This means that a victim who works year-round is losing, on average, $3,300 per year and receiving only $10,500 in annual wages.”
“Young workers, women, people of color, and immigrant workers are more likely than other workers to report being paid less than the minimum wage, but this is primarily because they are also more likely than other workers to be in low-wage jobs. In general, low-wage workers experience minimum wage violations at high rates across demographic categories. In fact, the majority of workers with reported wages below the minimum wage are over 25 and are native-born U.S. citizens, nearly half are white, more than a quarter have children, and just over half work full time.”

“In the 10 most populous states, workers are most likely to be paid less than the minimum wage in Florida (7.3 percent), Ohio (5.5 percent), and New York (5.0 percent). However, the severity of underpayment is the worst in Pennsylvania and Texas, where the average victim of a minimum wage violation is cheated out of over 30 percent of earned pay.”

“The poverty rate among workers paid less than the minimum wage in these 10 states is over 21 percent—three times the poverty rate for minimum-wage-eligible workers overall. Assuming no change in work hours, if these workers were paid the full wages to which they are entitled, less than 15 percent would be in poverty.”

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