Feeding off the fury of fast-food workers’ protests, cities and states have been surging to raise their minimum wages across the country. The nation’s capital is poised to pass a new $15 hourly minimum wage, on the heels of New York State and California, which just enacted the first statewide $15 hourly base wages. Since 2012, about 17 million workers nationwide have received newly enacted or pending minimum-wage hikes, to be phased in over several years.
But as the wage floor inches up nationwide, it’s continually falling out from under the feet of millions of struggling workers. Thanks to structurally weak enforcement of labor standards, any new law promising to raise pay scales often isn’t worth the paper it’s printed on.
Whether the minimum wage is $8 or $15 might be immaterial to countless workers who are denied legal recourse against cheating bosses, mainly because of the lack of any meaningful consequences for crooked bosses. So they get away with skimming an estimated $50 billion in “stolen or unpaid wages” each year, according to the Economic Policy Institute (EPI). It’s essentially the tax imposed on poor workers through an institutionalized cycle of precarious working conditions, threadbare regulation, and vulnerability to exploitation.
At the state and federal levels, the rules are typically rigged so that, even in the rare instance of a successful wage-theft claim, the victim still might never be made whole. As the EPI notes in a policy brief, under the keystone federal wage-and-hour law, the standard punishment for wage theft is to repay the amount owed plus “an equal amount as liquidated damages.” But in reality this leads to “often no more than an order to pay back the wages that were owed, or even a fraction of the total amount,” because of the limitations in the damages formula.
The wages owed are calculated as double the amount of underpayment based on the minimum wage. So say your boss shorted your $10-an-hour wage by secretly clocking you at $5 an hour. Under current rules, the Labor Department would calculate damages owed according to the federal minimum, as $7.25-$5 = $2.25, which then can be doubled to $4.50 including damages. That’s much less than backpay calculated according to the real amount stolen, $5 per hour (plus $5 in damages); you still lose—and the boss gets to keep—$5.50 per hour.