Under the table, off the books and tax-free—it might sound like a great deal for both employer and employee, but it's not.
Low-wage workers in Los Angeles, New York and Chicago lose an estimated $2,634 per year to wage theft, a term used to describe any number of workplace violations in which employers shortchange the people they hire.
This finding and many others came as part of a recent study co-authored by the Center for Urban Economic Development, the National Employment Law Project and the UCLA Institute for Research on Labor and Employment.
Another find: more than a quarter of low-level workers make below minimum wage in their states, a blatant violation of federal and state labor laws.
The study included interviews with more than 4,000 workers from low-wage industries such as garment manufacturing, restaurant and food services, and car wash services. And while the results appear to support several longstanding stereotypes, not all assumptions about who's getting stiffed and who's doing the stiffing hold true.
For instance, undocumented immigrants face higher rates of certain types of wage theft than documented immigrants or U.S.-born citizens. Examples include receiving less than the minimum wage and being unpaid or underpaid for overtime.
Workers who spoke little to no English were more vulnerable than their fluent counterparts, and those who were paid in cash were more likely to be shortchanged than those receiving checks and pay stubs, because cash payments are easier to hide from the government.
But some surprising results came from the study, not least of which that, in general, wage theft occurs across the board, regardless of factors such as race, legal status or English proficiency.
Workers at garment factories are commonly stigmatized as sweat-shop workers, yet they receive the minimum wage more frequently than child care workers. And U.S.-born workers actually experience a higher rate of overtime violations than legal immigrants in the same kinds of jobs. In fact, no occupation experienced higher rates of minimum wage and overtime violations than child care workers.
But the ultimate takeaway for the authors of the study? Wage theft is rampant in low-wage markets, feeding the so-called underground economy, and if policymakers want to get a handle on it, they must focus on three areas: strengthening enforcement of labor laws, updating labor standards, and guaranteeing equal protection for workers regardless of legal status.