Wage theft rising in pandemic
Minorities, immigrants, women more vulnerable in recession, experts say
Fredy Moreno had been working as a house painter for a few weeks in March when he began to suspect that his boss had no intention of paying him.
“He told me that he was going to pay me on a certain date, then moved that date,” Moreno said through an interpreter. “Then he made an excuse — that he’s in the hospital.”
But because the pandemic had just hit and he worried about finding another job, he decided to keep working. By the time he cut his losses a few weeks later, Moreno, who lives in the Minneapolis area and has sought help from the worker organizing group CTUL, was owed more than $13,000, he estimates.
Even in the best of times, workers in industries like construction, apparel, food and domestic work can have trouble collecting some or all of the compencase, sation they are due — especially if they are people of color or women, or lack U.S. citizenship or union representation.
But during a recession, the problem — known as wage theft — tends to increase significantly.
According to a paper released Thursday by the Washington Center for Equitable Growth, a liberal think tank, the rate at which workers suffered violations of minimum-wage law increased almost in lockstep with the unemployment rate during the last recession. On average, the workers on the receiving end of these violations lost about one-fifth of their hourly wage.
The paper’s numbers show that more than 20% of low-wage workers were probably paid less than what the law requires in April, when the unemployment rate peaked, up from just over 10% before the pandemic.
There are two key reasons. First, as in Moreno’s workers have fewer job options when the economy is weak, making it harder to stand up to employers that shortchange them.
“In slack labor markets with high unemployment, we know that workers are just going to be less likely to come forward because they’re more afraid of losing their jobs,” said Janice Fine of the Center for Innovation in Worker Organization at Rutgers University, who led the team that conducted the research.
In addition, labor regulators often have fewer resources to devote to enforcement during a recession, as cities and states cut their budgets.
The lack of effective regulation reverberates through entire industries, Fine and her colleagues write: Unchecked wage theft allows unscrupulous employers to undercut their law-abiding competitors and puts pressure on those competitors to shortchange their workers as well.
“Wage theft and a myriad of labor abuses have increased during the pandemic, and they’ve increased on an already vulnerable population,” said Angeles Solis, the lead organizer for Make the Road New York, a group that promotes the interests of immigrant workers.
In some cases, employers that had been obeying wage laws before the pandemic simply ceased doing so after it hit, counting on workers’ reluctance to push back.
But often the changes that push workers below minimum wage are less overt. Restaurant suppliers like bakeries scaled back workers’ hours and laid off many of them during the pandemic, driving workers who had made the minimum wage or more into less stable, lower-paying gigs, said Gabriel Morales, the program director for Brandworkers, a group that organizes workers in the specialty food-making industry.
“People are being pushed into even more exploitative sectors of the economy,” Morales said.