Study concludes wage theft increases during recession

An economic think tank says workers – especially those whose earnings are at or near the minimum wage – are more likely to experience wage violations during an economic downturn. The Washington Center for Equitable Growth says workers, on average, lose one-fifth of their pay to wage theft.

Researchers say even when the economy is booming, people who work in construction, the food industry, clothing and those with domestic jobs have difficulty receiving all the compensation they deserve. That’s especially true for people of color, women and those lacking union representation or citizenship.

Key takeaways from the study

Researchers examined employment data from the Great Recession of 2007 to 2009. They found a link between unemployment levels and minimum wage violations. Significant findings include:

• Workers suffering minimum wage violations increased along with a rise in unemployment
• Low-wage workers were paid 10% to 22% below the minimum wage
• Minimum wage violations amounted to an average of 22% of their hourly pay, or $1.46 per hour

Disturbing data emerges over targeted groups

The study shows some people were more likely to be victims of wage theft than others during the Great Recession:

• 84% of Latinx workers were more likely to experience wage theft than white workers
• 50% of women and Black workers were more likely to see their rights violated than white workers and men
• Noncitizens were twice as likely to have their rights violated than U.S. citizens
• Noncitizen Latinx women were four times – and noncitizen Black women 3.7 times – more likely to suffer from wage theft

Wage violations expected to rise

Researchers predict another surge in wage and hour violations during the COVID-19 pandemic. However, they caution that worker complaints will likely decrease due to concerns over keeping their jobs during this challenging time.

The U.S. Labor Department estimates that four out of every five employers do not comply fully with wage and hour laws. If you are not receiving the compensation you have earned, contact an experienced wage and hour attorney who will protect your rights.