On Thursday, July 24th, 2008, the federal minimum wage was raised to $6.55 an hour.
And there was much rejoicing...
Only not really. Beyond the fact that a $6.55 an hour minimum wage is insanely low for anyone to even attempt to live on without income supports and government assistance (see Jonthan Tasini's good analysis of this here and the EPI's analysis here) is the little noticed yawn from employers about the wage hike. The last time an increase in the minimum wage was floated, the Dick Armeys and Phil Gramms of the world were out with their supply and demand curves warning of apocalyptic collapses in employment as low wage workers in the US became too expensive. I suspect that the muted reaction from the employer side has a lot to do with the reality of low wage labor in the United States. See, it's an open secret that employers in the low wage labor market routinely engage in wage theft or, to put it more bureaucratically, in violations of wage and hour standards set out by the Fair Labor Standards Act (FLSA) or other relevant laws. Wage theft occurs when employers simply do not pay the wages that their employees legally or contractually deserve. Wage theft includes overtime violations, basic hour skimming violations, misclassifying workers as independent contractors and a host of other larcenous practices. Using the milquetoast language of "wage and hour violations" obscures the reality of the situation: that the law of the land does not apply to millions of American workers, low wage or otherwise.
The Department of Labor, the agency that's supposed to enforce the FLSA and be an advocate for workers, was deservedly put on the hot seat by worker advocates, Congress and the GAO last week (and even by Lou Dobbs!) Shockingly, enforcement of wage and hour laws has not been a priority in the Bush DOL. Imagine a police department that, faced with rising crime, changed its policies to reduce the number of target investigations, reduced community policing efforts, only responded to complaints instead of acting proactively, and didn't log phone calls into its offices. This is about as an accurate a picture of the DOL's wage and hour division as one can draw from the raw numbers. At the very moment in our economic history when business models force managers to skim costs by any means necessary (see Steve Greenhouse's The Big Squeeze for a good picture of the situation), the institution charged with protecting workers' right to fair compensation has largely ceded the field to the unscrupulous, unethical and stingy.
Wage theft is a national crisis. African-American and immigrant workers in poultry plants in Mississippi report stolen wages and mafia-like harassment if they complain. Caribou Coffee baristas and Wal-Mart workers have to rely on private lawsuits and not on their duly elected government to protect them and recover lost wages and tips. Computer programmers, factory workers, white workers, black workers, young, old, citizens and non-citizens have no guarantee that their rights at work will be protected and they'll receive the (steadily decreasing) wages they've been promised in return for (continually harder and less safe) work they do. In Chicago, one worker center affiliated with Interfaith Worker Justice recovered almost $2.75 million dollars in lost wages between 2003 and 2007. That's with a staff of four that relies on donations and foundation grants. In New Orleans, community leaders describe a wild west of wage theft, in which companies receiving federal and state contracts will often pay little to no wages for arduous clean-up and rebuilding work. If this is the vision of "starting from scratch" that so many had after Katrina leveled the city, then we are building a deeply immoral society.
In Chicago, there's a lot of talk over the causes of the recent rise in crime, which mirrors national trends. Time and time again, analysts point to the lack of economic opportunity for so many in the low wage, entry level labor market, among other factors. There is no way that cities and communities can build strong sustainable neighborhoods when employers continually hack away at the economic foundations of those neighborhoods, by siphoning away the wages of those who work, with little or no consequence. We reformed welfare to promote work, we threw millions of dollars in property and income taxes to lure companies to provide jobs for local residents, and we spend millions cracking down on the undocumented who supposedly drive down wages, while we ignore the reality of wage theft and its effect on communities and workers. Lowering worker salaries through fraud and theft lowers tax receipts, hurts small businesses, and gives little incentive for those who are told to play the game, follow the rules and move up in society to do so. At least when a drug dealer runs away with your money or a pimp steals from sex workers, they're not hiding beyond platitudes of economic competitiveness or the free market.
An increase in the minimum wage or job training dollars, or any other program to help workers, will not help workers as long as wage theft remains unchecked. Without the rule of law becoming reestablished in the American workplace, the prospects for economic recovery and better standards of living for millions of workers remain dim.
Jason / July 30, 2008 9:58 AM
Typical. Tune the heart strings instead of having an original thought. Its "employers" fault that crime in Chicago is on the rise... right.
Maybe the collective yawn is because most states have taken the matter into their own hands (as they should) by enacting their own minimums wages. Obviously, the cost of living in NY is different than WY, so the minimum should reflect that.
If employers are violating the law, they should be taken to task. But if you believe that the government should add hundreds of jobs - your own reference advocates thousands - in the attempt to recover lost wages, you are running a fool's errand. These lost wages are only significant when you aggragate them, so the real cost of recovery would be far greater than the amount recovered. It doesn't make sense to take $10 from taxpayers to recover $5, and then distribute $5 to 100 people.
If this is such a national crisis, why don't you organize a group of lawyers to file class action lawsuits against employers that are in violation. That would streamline the process and take the burden of cost into private hands instead of another increase in government spending.