Brown Introducing Legislation to Crack Down on Companies That Cheat Workers out of Wages They Earned

Posted by National Alliance for Fair Contracting on

Office of Sen. Sherrod Brown
May 18, 2022

New Report Reveals More than 200,000 Ohioans Lose Out on Thousands of Dollars in Wages Each Year; Brown Bill Would Help Put Wages Back in Workers’ Pockets, Strengthen Worker Protections

WASHINGTON, DC – U.S. Senator Sherrod Brown (D-OH) joined Policy Matters Ohio and Ohio workers for a news conference call to discuss his Wage Theft Prevention and Wage Recovery Act, new legislation to crack down on employers that unfairly withhold wages from their workers.

New analysis from Policy Matters Ohio finds that each year, employers steal from at least 213,000 Ohioans by paying them below the minimum wage, costing a worker who is on the job the full year an average of $2,900, or a quarter of their total wages they earned.

Brown’s new bill with Sen. Patty Murray (D-WA) and his colleagues would put hard-earned wages back in workers’ pockets and crack down on employers who unfairly withhold wages from their employees.

“It’s simple: If you put in the work, you should get paid for it. Companies should not be able to cheat workers out of the wages they earned and get away with it,” said Brown. “Our bill will give workers the power to fight back and recover their lost paychecks, and it will mean real consequences for employers that steal the wages Ohioans work so hard for.”

Brown was joined on the call by two Ohio workers whose wages were stolen by their employers.

“So many people keep quiet about wage theft for fear of losing their jobs. It’s time we put a stop to this,” said Ernest Hatten of Cleveland.

(Read More)

Honest day’s pay

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Policy Matter Ohio
May 18, 2022

KEY FINDINGS: WAGE THEFT IN OHIO

  • Ohio employers steal from an estimated 213,000 workers a year by paying them less than the state or federal minimum wage.
  • If wage theft victims stayed on their job the full year, the total underpayment of wages to these Ohio workers would be $611 million each year.
  • While 3.8% of all Ohio workers have wages stolen each year, employers steal from 18.4% of workers paid $11.44 per hour or less.
  • Victims of minimum wage violations are underpaid an average of $55 per week, 24% of the weekly earnings owed to them. If they work year-round, they lose, on average, $2,873 per year and are paid only $9,011 in annual wages.
  • Women make up about three in five victims who are paid below the minimum wage.
  • Hispanic workers were 74% more likely to become victims than white counterparts, while Ohioans of other races — about three quarters of whom are Asian — were 51% more likely. Black workers were about as likely to indicate wages below the minimum wage as white workers, but Black workers spent more hours working for employers who stole from them and lost more wages, overall.
  • About 54,000 parents are paid below the minimum wage each year. Together they are raising about 108,000 children under 18 years old.
  • Low-paid workers in all industries are vulnerable, but half the wage theft cases occurred in the leisure and hospitality industry.

Introduction

Everyone who works should be paid their full wages for all the hours they put in. Too often in Ohio, employers steal from workers’ paychecks. By underfunding wage and hour enforcement, Ohio lawmakers make it too easy for employers to commit wage theft, and too hard for workers to be made whole. The scale of wage theft is difficult to measure, but we know that it far exceeds the number of cases ever reported. Most wage theft victims never come forward because they don’t know their rights, think nothing will be done for them, or fear retaliation from their employer.

Using Current Population Survey (CPS) data and a method developed by the Economic Policy Institute (EPI), this report quantifies the scope and cost of wage theft to Ohio’s working people. Employers steal from an estimated 213,000 Ohioans each year through minimum wage violations alone.[1] This report updates prior research released by EPI and reveals that, in the five years since that research was released, the scale of wage theft in Ohio has remained virtually unchanged.[2] Employers in all sectors steal from employees, but wage theft is most prevalent in industries that pay low wages, especially leisure and hospitality. Wage theft compounds financial hardships for people who are too often exploited at work due to their race, gender, immigration status or socioeconomic class.

This report quantifies the scope and cost of wage theft to Ohioans through minimum wage nonpayment alone. Because the vast majority of wage theft goes unreported, most types of wage theft cannot be measured. This report identifies minimum wage nonpayment — just one form of wage theft — from respondents to the Current Population Survey who identified their wage as less than the federal or Ohio minimum wage, regardless of whether they ever made a wage claim. These estimates have been produced by Policy Matters Ohio following a research methodology developed by EPI. Data are from the CPS Outgoing Rotation Group for years 2017-2019, using the extract from the Center for Economic Policy Research.[3] Exempt workers are identified wherever possible so that those estimated here to be wage theft victims were both paid less than the minimum wage and covered employees under state or federal law. Wages are reported in current year dollars. A full methodology is available from Policy Matters Ohio.

(Read More)

(Executive Summary)

(Full PDF of Report)

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More than $3 billion in stolen wages recovered for workers between 2017 and 2020

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Economic Policy Institute | December 22, 2021
Report by Ihna Mangundayao, Celine McNicholas, Margaret Poydock, and Ali Sait

Over the last four decades, the U.S. economy has been marked by extreme inequality, which has only been exacerbated by the COVID-19 pandemic. In the midst of this global pandemic and an economic crisis, the number of individuals with household weekly earnings below the poverty line rose to 65.1 million, a 28% increase from February to June 2020 (Saenz and Sherman 2020). In contrast, CEO pay rose by nearly 19% in 2020 (Mishel and Kandra 2021). This rise in poverty and pay inequality is compounded by wage theft, which robs millions of workers of billions of dollars from their paychecks each year (Cooper and Kroeger 2017).

What this report finds: Each year millions of workers across the country are victims of wage theft—meaning they are paid less than the full wages to which they are legally entitled. Between 2017 and 2020, more than $3 billion in stolen wages was recovered on behalf of workers by the U.S. Department of Labor, state departments of labor and attorneys general, and through class and collective action litigation.

Why it matters: This staggering amount represents just a small portion of wages stolen from workers across the country. And while wage theft impacts workers broadly, it disproportionately affects low-wage workers, many of whom already are struggling to make ends meet. Wage theft also disproportionately impacts women, people of color, and immigrant workers because they are more likely than other workers to be in low-wage jobs. Finally, these stolen wages hurt local economies and tax revenues.

What can be done about it: Increase funding for the Department of Labor’s Wage and Hour Division to boost institutional and investigative capacity; engage in proactive and strategic enforcement in those industries where violations are especially severe or rampant; enhance civil monetary penalties for wage and hour violations; protect worker rights to collective action, as union workers are less likely to experience wage theft because they have the bargaining power to establish mechanisms to combat the practice; and strengthen and boost funding for state and local enforcement.

Wage theft occurs any time employees do not receive wages to which they are legally entitled for their labor. This could take many forms, including paying workers less than the minimum wage, not paying overtime premiums to workers who work more than 40 hours a week, or asking employees to work “off the clock” before or after their shifts.

Even the theft of seemingly small amounts of time can have a large impact. Consider a full-time, minimum wage worker earning the federal minimum wage of $7.25 an hour who works just 15 minutes “off the clock” before and after their shift every day. That extra half-hour of unpaid work each day represents a loss to the worker (and a gain to the employer) of around $1,400 per year, including the overtime premiums they should have been paid. That’s nearly 10% of their annual earnings lost to their employer that can’t be used for utilities, groceries, rent, or other necessities.

Background and prior studies
While quantifying the true extent of wage theft can be a challenging undertaking—much of it goes unreported—existing reports and studies paint a clear picture: Wage theft is a costly and undeniably pervasive problem that affects millions of workers across the country.

Cooper and Kroeger (2017) investigated just one type of wage theft and found that in the 10 most populous states in the country, 17% of eligible low-wage workers reported being paid less than the minimum wage, amounting to 2.4 million workers losing $8 billion annually. Extrapolating from these 10 states, Cooper and Kroeger estimate that workers throughout the country lose $15 billion annually from minimum wage violations alone.

The personal cost of wage theft to these workers is significant: Cooper and Kroeger found that on average, the workers suffering from minimum wage violations in these 10 states were cheated out of $64 a week—about $3,300 annually for year-round workers. These workers lost almost one-quarter of their earnings, receiving on average only $10,500 in annual wages instead of the $13,800 they should have received.

(Read More)

STUDY: Should Prevailing Wages Prevail? Reexamining the Effect of Prevailing Wage Laws on Affordable Housing Construction Costs

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Matt Hinkel, Michigan State University, Dale Belman, Ph.D., Michigan State University (ICERES, Institute for Construction Economic Research)

A current policy debate surrounding state prevailing wage laws is centered on whether they are costly to state governments and taxpayers. The authors contribute to this debate by extending and utilizing data from a 2017 prevailing wage study to replicate and investigate a controversial paper often cited in this debate. The authors examine the relationship between California’s prevailing wage law and the costs of building affordable housing, and they do so by going beyond the 2017 study’s estimates and estimating a carefully-constructed two-stage model. The authors find no causal effect of prevailing wages on affordable housing construction costs, contradicting previous literature. Further, in a supplemental analysis, the authors examine and highlight key methodological deficiencies present in a prior study. This timely research is designed to contribute to the current prevailing wage debate, which has important implications for researchers, practitioners, and legislators.

(PDF Copy of Full Study)

(Visit the ICERES Website)

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STUDY: Prevailing Wage Laws Boost Homeownership for Construction Workers

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February 19, 2020
By: Frank Manzo IV, Jill Gagstad, Robert Bruno, Ph.D.

Prevailing Wage and the American Dream: Impacts on Homeownership, Housing Wealth, and Property Tax Revenues

This study examines links between prevailing wage laws and homeownership, housing wealth, and property tax revenues for … workers and their communities. …

State prevailing wage laws promote the hiring, development, and retention of skilled workers by encouraging investment in apprenticeship programs. Prevailing wage rates often include a cents-perhour-worked contribution into workforce training institutions. As a result, apprenticeship training is 6 to 8 percent higher in states with prevailing wage laws, boosting worksite productivity by an average of at least 11 percent (Bilginsoy, 2003; Duncan & Lantsberg, 2015). Since state prevailing wage laws enhance productivity and labor costs are a small percentage of total costs in construction, the preponderance of the peer-reviewed research has concluded that state prevailing wage laws have no impact on total project costs (Duncan & Ormiston, 2017).

…despite a robust economic literature on apprenticeship training, safety, worker earnings, and costs, little research has been conducted showing the effect of state prevailing wage laws on construction worker homeownership.

This report, conducted jointly by the Illinois Economic Policy Institute (ILEPI) and Project for Middle Class Renewal (PMCR) at the University of Illinois at Urbana-Champaign, fills that void in the economic research, assessing the impact of state prevailing wage laws on the homeownership rate of skilled construction workers. The impact of state prevailing wage laws on the home values of blue-collar construction workers is also analyzed, determining whether the policy allows construction workers to build household wealth and positively contribute to their communities through property tax revenues.

(PDF Copy of Full Report)

(Visit the ILEPI Website)

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Wage theft a problem across industries, study says (NV)

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By: Bailey Schulz
Las Vegas Review-Journal
June 3, 2019 – 7:22 am

…

Wage theft is a recurring problem found in a range of industries across the state, according to a 2018 study. Today’s tight labor market isn’t expected to help.

Nevada’s findings

Nevada Labor Commissioner Shannon Chambers said wage theft cases – instances where a company tries to raise profits by forcing employees to work off the clock or not paying them for overtime work – have been on the rise in Nevada over the past four years. But that doesn’t necessarily mean more companies are engaging in illegal practices.
“We are receiving more claims,” Chambers said. “Part of that is because our economy is improving again, and there are more people in the workforce.”

Back wages on the rise

In 2018, the U.S. Department of Labor’s Wage and Hour Division collected an average of $835,000 for workers per day in back wages – the difference between what an employee was paid and the amount that employee should have been paid.

 

The Department of Employment, Training and Rehabilitation reported that unemployment in Nevada dropped to 4 percent in April, the lowest in 13 years.

Nevada isn’t the only state facing wage theft disputes, according to a 2018 study by national policy resource center Good Jobs First.

(Read More)

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New West Virginia study finds repeal of prevailing wage saved taxpayers no money (WV)

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by Jake Jarvis
May 21, 2019

CHARLESTON – Officials with the West Virginia State Building Trades Council and Affiliated Construction Trades say lawmakers should consider reinstating the prevailing wage law in light of a new study.

The study, published this month by a researcher from Missouri University and the Midwest Policy Institute, found that repeal of the prevailing wage law “had negative impacts for West Virginia’s construction workers, contractors and communities while failing to deliver any meaningful cost savings.”

Steve White, director of the ACT, said in a press conference Tuesday afternoon that the promised results of repealing the prevailing wage law have not been realized.

The law required that workers on state-funded construction projects be paid a so-called prevailing wage, which was calculated by state officials after determining the usual pay rate on such projects in West Virginia.

Proponents of repealing the 1933 law said it would reduce construction costs, but opponents said repealing it would allow out-of-state companies to come to West Virginia and undercut companies here by bidding far below them.

Luther Lasure, director of the Kanawha Valley Builders Association, said that’s exactly what happened.

He said there have been more out-of-state contractors winning bids for state-funded projects. And he said said those out-of-state companies don’t have as much of an incentive to do quality work, since they don’t actually live in the community.

Lasure said that, as uncomfortable as it is to admit it in a press conference full of union officials and supporters, he’s a member of the Republican Party, the party that repealed the prevailing wage. Despite this, he said he believes in listening to the data and the data shows the repeal has hurt workers.

“The taxpayers are not saving any money, but wages have been cut dramatically,” White said.

White called on legislative leaders to “correct course” and reverse the “terrible mistake” they enacted with repealing prevailing wage in 2015.

(Read More)

Fair Wages are Good for the Economy, Albany Should Pass an Expanded Prevailing Wage (NY)

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March 28, 2019 | by Kevin Duncan

As the next state budget is being debated in Albany, increasing attention is being paid to the state’s prevailing wage laws. With so much misinformation out there, let’s set the record straight. Paying construction workers a middle class wage is a net positive for New York’s economy.

Specifically, the issue is how construction workers are paid for projects that receive public funds. Since 1897, projects receiving taxpayer funds are required by New York State law to pay fair wages to their workers. The problem is that developers are increasingly exploiting loopholes created by the growth of public-private projects, which blur the lines of what’s considered “public work.”

One recent example is the Chelsea assisted living facility on Long Island. The project received $15 million in public funding, but because that money came through the Brookhaven Industrial Development Agency (IDA), there was no requirement to pay workers a middle-class wage.

Legislation currently making its way through the legislature would close that loophole.

The bill,S 1947(Ramos)/A1261(Bronson), would clearly define “public work” as any large-scale project that is paid for with public funds. By ensuring that projects subsidized with public funds support middle class wages, the law will strengthen the middle class and the state’s economy.

Chances are that you’ve seen folks in the business community argue the opposing viewpoint – but when you look under the surface, those arguments tend to rely on overly simplistic or just plain inaccurate information.

Take the industry-backed argument that paying workers a middle-class wage would force costs to skyrocket and immediately put an end to all development. When a wealthy developer complains that much about paying a fair wage, you have to wonder how little they’re actually paying their workers.

As an academic, I rely on data and evidence to form a judgment. The data show that labor costs for construction projects usually amount to about 23-24 percent of the total project cost. To keep the math simple, let’s say that a prevailing wage law results in a 10 percent raise for construction workers in a given region. At most, that would increase total cost by 2.5 percent. A 2.5 percent cost can be easily offset by the efficiencies gained from paying the highly-trained workers you attract with a prevailing wage. Trained, skilled workers mean higher productivity along with fewer accidents, errors and change orders.

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(See PDF of Full Study)

California needs 200K construction workers to help affordability (CA)

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by Steve Randall
20 Jan 2019

The lack of housing supply has multiple factors including the cost of borrowing and materials; but a shortage of labor is also a major factor in many areas.

In California, the Housing and Community Development Department has said that the sector needs improved productivity to tackle housing affordability. But a new study says there is a key barrier to this – a workforce shortage.

Smart Cities Prevail, a construction industry-focused non-profit, says that the residential construction industry in California must do more to attract the 200,000 workers it needs to meet the ambitious goal to improve affordability.

“The data shows residential construction work is more dangerous, economically risky, and lower paying than most other jobs in our economy,” said study author Scott Littlehale. “When you consider these dynamics alongside the industry’s aging workforce, its failure to institutionalize investments in apprenticeship training, and a shrinking supply of young workers and immigrants, it is clear why the housing sector is struggling to attract the new workers it needs.”

Littlehale found residential construction workers earn 24% less per year than all other jobs on average, and less than half have health insurance coverage through their employer. This is exacerbated by a typically longer commute.

(Read More)

Report: Construction Contractors Cheating Workers, Taxpayers (PA)

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By John Nichols
JANUARY 7, 2019

January 14, 2019

HARRISBURG, Pa. – Unscrupulous contractors in southeast Pennsylvania routinely are violating labor laws and victimizing customers, including state and local government, according to a new report.

The report from the Keystone Research Center found many contractors in the regional Philadelphia construction industry are in a race to the bottom.

Stephen Herzenberg, author of the report, calls that “destructive competition” – cutting costs by misclassifying workers as independent contractors, cheating them out of overtime pay, investing little in worker skills and in some cases operating unsafely.

“When construction contractors and subcontractors compete by violating the law, wage theft, threatening workers’ health and safety, in the end nobody else wins,” he states.

The report says imposing stiffer penalties for labor law violations and directing more resources to enforcement agencies would help safeguard workers, law abiding contractors and taxpayers.

Herzenburg points out that effective enforcement can pay for itself by directing revenue from fines and penalties to enforcement agencies, and it can change the current landscape of the construction industry.

(Visit the Keystone Research Center Website)

(View PDF copy of Study – Illegal Labor Practices in the Philadelphia Regional Construction Industry: An Assessment and Action Plan)

(Read More)