Wage Theft Thu Apr 08 2010

More Than $7 Million Stolen From Locals Every Week

By Ramsin Canon

A group of researchers released a report [PDF] this week finding that local low-wage workers are the victims of wage theft to the tune of more than $350 million a year, or $7 million a week. The researchers, primarily from the Center of Urban Economic Development at the University of Illinois at Chicago, surveyed over a thousand workers from low wage industries, including those paid "under the table," undocumented workers, and those considered "independent contractors". This shocking finding is just the most appalling; the study is rife with data demonstrating widespread criminal exploitation of employees throughout the Chicagoland area. A shocking number of workers are criminally denied vested rights in the workplace, including denial of overtime and breaks, a lack of accounting of wages owed and paid, and sleight-of-hand to avoid providing legally required vacation or paid time off. This failure to enforce these laws and protect these people is grievous, but not surprising: it is part of a pattern of coddling employers.

This research comes on the heels of a landmark study on wage theft released last year and increased academic awareness of the problem of wage theft and disregard for labor and employment standards. With the recent death of 25 mine workers in West Virginia in a facility with myriad unaddressed safety concerns, the hostile legal environment American workers face may finally be revealing itself through drama, but the disregard for basic legal safeguards and the coddling of employers by local, state, and federal governments is not new nor did it originate under the previous administration. It has been a constant drumbeat for over thirty years, and the untold fortunes stolen by unscrupulous employers, and the lives wrecked by reckless health and safety enforcement will likely never be accounted for.

So, every week 150,000 workers are being robbed in Chicago--often people who can afford it least. When they aren't being outright robbed, they are the victims of legal fictions that allow employers to ignore workplace safety and basic labor safeguards in order to further enrich their employer. American workers labor under one of the most hostile labor law regimes in the Western world, beginning with the doctrine of "at-will employment" that puts workers at the mercy of their employer and contributes greatly to Americans' sense that they give up all of their constitutional rights when they step into the workplace.

Big business and their lobbying and think tank arms--the Chamber of Commerce, industrial associations, groups like the Heritage Foundation--always want laxer and laxer regulations on workplace behavior. They see it is as "freedom". Of course, that is only freedom for the employer. The employee has no freedom or rights in the workplace. The result is what we see in this study: the employer/employee relationship is so lopsided that employers feel justified in literally stealing from their employees. This undercuts honest business, and ultimately benefits only big firms, since small businesses couldn't even steal at a scale necessary to keep up with the big employer firms that dominate the economy.

Libertarians and their conservative fellow travelers like to come up with noxious catchphrases to dress up exploitation as welfare: thus the recent hilarious effort by these types to reclassify your bosses as "Job Creators". The world is not divided between labor and capital, no; it is divided between the munificent Job Creators and parasitical Job Takers who owe everything to them. (Nevermind that every job they create has an associated profit they gobble up, and without qualified workers to do the jobs, they would not make any money; their livelihood relies on us as much as vice versa). They mewl and puke about how most businesses are small businesses (true in terms of paperwork) and enforcing these labor laws would strangle these rugged individualist businesses.

But, of course, that is all mythology. First of all, honest employers--the majority of employers, as even this study shows--are forced into a race-to-the-bottom by the uneven enforcement of labor law (a failure of the right to equal protection and due process, for you Original Intentists out there). Secondly, no, most people work for big employers, and big employers certainly set the standards. Of the 115m workers in the US workforce (in 2004), more than 60m worked for large employers--firms employing more than 100 people; a hair under half of those 115m worked for firms that employed more than 500 people. More than 40m worked for megafirms with more than 2,500 employees. "Most business is small business" is a meaningless sentiment based on the fact that the total number of firms legally created have no employees at all, and that lots of self-employed people incorporate; of 25m firms in the US (again, in 2004), 20m had zero employees. So yes, technically "most business is small business".

Employers are coddled in this country because you have been taught that you should be thankful that you have a job, as though "job creation" is a charitable act. It is not. Jobs are created at the point where no more profit can be extracted from an existing workforce, and, more importantly, they are destroyed at the farthest point fewer workers can push themselves. Fewer people doing more work is always preferable for employers. That's not controversial; that's Econ 101. We live in an industrial economy; to survive, we need to work a job. We can't all be self-employed. Libertarians don't want a society where we're all self-employed; capitalism requires some people work for others. That's fine; but why should those who do work that must be done for the economy to function be treated like lepers who are merely benefiting from the grandiosity of those rugged Job Creators? Why are employers treated with kid gloves, as though they would choose to just "not create jobs"? Every job they create has an associated return on investment: there is a profit for them for every job they make. Fewer jobs means less profit. If they arbitrarily choose to make less profit out of spite, where there is profit to be made some other actor will move in to make that profit (and, presumably create that job). We learned that from watching you, free marketers.

The at-will employment exists nowhere else in the Western economies, including in those economies currently performing better than our own; in fact, the state of Montana abolished at-will employment, and suffered no detectable loss in "job creators", even though it is surrounded by at-will states. Reactionaries always tell you the sky will fall and the John Galts will take their hoarded gold to the mountains of Colorado if you make them abide by any rules (though rules placed on workers, such as the obscene "duty of loyalty" to an employer, are just fine). While free market fundamentalists may concede that the rules that force employees to be servile to their employers should be abolished, too, you rarely seem those planks in their platforms, do you? No; everything is about coddling and nursing Job Creators at the teat of the law, to protect the rate of profit they gain from each job created from greedy employees who should be on their hands and needs thankful that they get anything at all.

Cities can take action to fight wage theft and protect workers from this criminal behavior. That would be a good first step towards reminding Americans that they have the right to dignity in the workplace, that they are not serfs fortunate enough to till the lord's land.