Wage Theft: A Crime Without Punishment?

Wage Theft: A Crime Without Punishment?

Wage Theft: A Crime Without Punishment?

Tip-stealing bosses are rarely called to account for their abuses. It’s time to blow the whistle.


Reuters/Luke MacGregor

In the first episode of the HBO comedy Girls, young Brooklyn hipster and would-be writer Hannah, outraged when her visiting parents cut off her allowance, steals the tips they’ve left for the hotel housekeepers. It’s a funny scene—partly because it tells us something about the ruthlessness beneath Hannah’s blurry indecisiveness, but also because it’s just so outrageous. What kind of crummy, selfish person would take rent and food money from hard-working women? In comedy: an overindulged Oberlin grad. In real life: the housekeepers’ supervisor.

Ruth Milkman, professor of sociology at the CUNY grad center and academic director of the Murphy Institute, likes to tell the story of a hotel housekeeper and her tip-stealing boss because it brings together so many features of the phenomenon of wage theft, the subject of her research. “She was an undocumented Mexican immigrant with four kids, very humble, and she worked in a brand-name Los Angeles hotel,” Milkman told me by phone. “She worked more than forty hours a week, but was paid only for forty hours—minimum wage. The law says supervisors and managers can’t get any part of your tip, but she said her supervisor would go into hotel rooms and take the tips before the housekeepers came in to clean. She complained about not getting paid for all her hours and was fired.” Female, undocumented, low-wage, not paid for all her hours, fired when she complains—it’s an all-too-typical story.

Low-wage workers in the United States face many harsh and demeaning circumstances—not being entitled to paid sick days, for instance. But there’s something particularly shocking about wage theft, an element of insult added to injury: not only does your boss pay you as little as he can get away with; he keeps a nice chunk of it for himself, just because he can. How much? According to “Broken Laws, Unprotected Workers,” a 2009 paper written by Milkman, Annette Bernhardt et al., fully 26 percent of the low-wage workers they studied in three cities—New York, Chicago and Los Angeles—had been paid less than the legally required minimum wage in the previous week; 60 percent of these were underpaid by more than $1 an hour. All in all, 68 percent of the sample had had at least one pay-related violation in the previous workweek. That turned out to be an average of $51 a week, or $2,634 a year. If a politician proposed increasing taxes by this amount, he’d be hanged from the nearest lamppost.

And that’s not all: work performed outside regular shifts was typically unpaid; workers were denied meal breaks to which they were legally entitled; and illegal deductions were taken from their pay (for work-related tools, transportation, etc.). Forty-three percent of the workers who complained (or tried to form a union) met illegal retaliation—they were fired, suspended, or threatened with pay cuts or the immigration authorities.

This is the shadow economy: workers (mainly women, people of color and undocumented immigrants) toiling in the service sector—restaurants, grocery stores, home healthcare, childcare—or in construction, manufacturing and warehousing. The vast majority make less than $10 an hour. In fact, 89 percent of in-home childcare workers don’t even make minimum wage. Think about that the next time someone tells you that caring for kids is the most important job in the world. (Think about it, too, next time you’re late and just pay the regular amount—that is wage theft, too, even if, as in one story Milkman tells, you bring your sitter chocolate as a thank-you.)

The problem isn’t ignorance. “Most employers are very well aware of the law,” Milkman said. “They’ve learned they can get away with this because there’s no enforcement.” Indeed, California has better laws protecting workers than Illinois or New York, but in follow-up research Milkman found that LA had significantly more wage theft than Chicago or New York City. Why so little enforcement? “It’s the product of years of history,” Milkman told me, citing the growth of the workforce, deregulation and cuts at the relevant agencies. (To be fair, Labor Secretary Hilda Solis has hired 250 more investigators—but this is a tiny fraction of what’s needed.) Another factor is toughening immigration law enforcement, which has made undocumented workers even more afraid to report abuses.

When I asked Milkman for some good news, she cited the increasing involvement of unions and worker centers in organizing low-wage workers. “The big immigrant marches in 2006 were very important,” said Milkman. “They showed that these are workers who want to move up in the world; they are very organizable.” In 2009, funded by the United Steel Workers, California car wash workers—mostly undocumented in an all-cash business where they were sometimes paid only in tips—scored a stunning success. Not only did they win new legal protections; they put some of their employers in jail.

More recently, workers at the Sixty-third Street Hot and Crusty in Manhattan, sick of rampant wage theft and other abuses, sought help from the Laundry Workers Center United, a community group. In May, the workers—who also got a boost from the Occupy movement—voted to unionize. It’s a start.

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