Employers steal billions from workers’ paychecks each year

Report • By David Cooper and Teresa Kroeger • May 10, 2017

What this report finds: This report assesses the prevalence and magnitude of one form of wage theft—minimum wage violations (workers being paid at an effective hourly rate below the binding minimum wage)—in the 10 most populous U.S. states. We find that, in these states, 2.4 million workers lose $8 billion annually (an average of $3,300 per year for year-round workers) to minimum wage violations—nearly a quarter of their earned wages. This form of wage theft affects 17 percent of low-wage workers, with workers in all demographic categories being cheated out of pay.

Why it matters: Minimum wage violations, by definition, affect the lowest-wage workers—those who can least afford to lose earnings. This form of wage theft causes many families to fall below the poverty line, and it increases workers’ reliance on public assistance, costing taxpayers money. Lost wages can hurt state and local economies, and it hurts other workers in affected industries by putting downward pressure on wages.

 

What can be done about it: Strengthen states’ legal protections against wage theft, increase penalties for violators, bolster enforcement capacities, and protect workers from retaliation when violations are reported.

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