Calculating Costs of Labor Law Violations

The New York Times editorial page draws attention to a new report that provides details about just how badly our system of workplace protections is failing workers in low-wage industries. Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in Americaâs Cities provides the results of extensive research by the Center for Urban Economic Development, the National Employment Law Project and the U.C.L.A. Institute for Research on Labor and Employment. Researchers surveyed 4,387 front-line workers (i.e., excluding managers and professional and technical workers) in low-wage industries in Chicago, Los Angeles, and New York City. Their study provides numbers showing just how appalling and widespread employment and labor law violations are. Here are a few of the figures from their report:

• In just the previous week, 26% of workers surveyed were paid less than the legally required minimum wage, and 60% of them were underpaid by more than $1 per hour. The average worker lost $51 out of average weekly earnings of $339 (theft of 15% of earnings), and the total impact of this is a loss of $56.4 million per week that could have been spent in workersâ communities.
• Among the tipped workers surveyed, 30% were not paid the tipped worker minimum wage, and 12% reported that their employer or supervisor stole from their tip amounts
• Among workers who reported having made a complaint to an employer or attempted to form a union, 43% experienced one or more forms of illegal retaliation
• Among workers who experienced a serious injury on the job, only 8% filed a workersâ compensation claim.
• Among the workers who did tell their employers about workplace injuries, half experienced an illegal employer reaction, including firing the worker, contacting immigration authorities, or telling the worker not to file for compensation.
• Among workers who were injured on the job, only 6% had medical expenses covered by workersâ compensation insurance; 33% had to pay their bills out-of-pocket.

The reportâs authors recommend three principles to drive the development of a new policy agenda for protecting workersâ rights:

• Strengthen government enforcement of employment and labor laws
• Update legal standards for the 21st century labor market
• Establish equal status for immigrants in the workplace

The Times editorial summarizes needed actions this way:

The answers are basic, though too long ignored. Government needs to send more investigators to back rooms, offices and factory floors, and to enlist labor organizations and immigrant-rights groups as their investigative eyes and ears. Penalties for wage-law violations need toughening. Employees who have historically been denied basic labor rights â domestic workers and home health aides â need to finally be given the protection of wage-and-hour laws. Companies must not be allowed to skirt their legal obligations by outsourcing hiring to subcontractors, letting others break the law for them.

These recommendations arenât new to anyone whoâs been following workplace dangers and injustices, but having some numbers showing how widespread and damaging the problems are may help strengthen the push for reform.