Wage Theft Costs Workers Estimated $50 Billion Each Year

As the New York Times recently covered, the issue of wage theft is one that has become increasingly prominent. Companies have found themselves forced to fork over thousands of dollars to repay workers for time that was effectively stolen from them and never properly compensated. Additionally, regulatory agencies have also gotten in on the act, filing their own claims against employers for depriving workers of needed compensation.

Though we know wage theft is a serious problem, the extent of the issue has largely been unknown, until recently that is. Wage theft is widespread across the county, according to experts, and impacts countless workers. A recent report by one group estimated that wage theft might be costing American workers up to $50 billion a year, far more than anyone ever suspected.

The Economic Policy Institute (EPI) conducted research regarding workers in low-wage industries working in New York, LA and Chicago. In these cities, researchers studied workers and found that workers in these industries lost nearly $3 billion each year in wage theft. Most of the money lost due to wage theft was in the form of unpaid overtime and instances where workers were never paid the minimum wage.

By extrapolating the study to include the millions of low-wage workers across the United States, a number many believe exceeds 30 million, EPI discovered that wage theft could cost workers more than $50 billion each and every year. This number is bad not only because it represents the loss of money to a group that counts on every cent, but also because it contributes to economic inequality. Wage theft functions as a kind of wealth transfer, moving money from low-income workers to the business owners who employ them, something that exacerbates an already serious problem.

According to EPI, wage theft is not merely a problem of a few lost minutes of pay. Instead, wage theft hits low-income workers hard financially. According to some statistics, the money lost due to wage theft among low-wage workers can total nearly 10 percent of their annual earnings, money most of these families dearly need.

Though government agencies and private lawsuits have been effective in punishing some employers, the problem is that many more companies engage in wage theft without ever facing punishment. In 2012, data indicates that more than $933 million was recovered from companies regarding wage theft claims. Though this is much better than nothing, it pales in comparison to the amount that employers have stolen from workers, hardly a drop in the $50 billion bucket.

And while government regulators and private employers have grown more confident with filing suit against the companies that perpetrate the wage theft, the vast majority of workers will never sue or complain about their poor treatment. Instead, these lawsuits are described by experts are merely representing the tip of the iceberg.

Source: Wage Theft Costs U.S. Workers Billions Of Dollars Annually, by Ellyn Fortino, published at ProgressIllinois.com.

Source: An Epidemic of Wage Theft Is Costing Workers Hundreds of Millions of Dollars a Year, by Brady Meixell, published at EPI.org.