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Study: Wage theft increases during recession

| Oct 21, 2020 | Employment Law

Many Americans have struggled over the past several months due to the coronavirus pandemic as millions have lost their jobs, businesses have shuttered, and many families face eviction as they are unable to make rent or mortgage payments.

A new study says many of those still working – particularly in low-paying and minimum wage jobs – are being paid less than what they are owed. Those affected are likely losing about one-fifth of their pay to wage violations by their employer.

Research shows violations increase during economic downturns

A recent study by the Washington Center for Equitable Growth focused on the Great Recession of 2007 to 2009. Researchers found wage theft rises with an increase in unemployment. They cite two main reasons.

First, when jobs become scarce during a recession, workers are less likely to stand up to employers for paying them less than they are owed. In addition, workforce regulators have fewer resources to enforce wage and hour laws as cities and states cut budgets.

Key takeaways from the study

The Center’s paper says the findings from more than a decade ago are in line with what’s happening during the current pandemic recession. The main conclusions include:

  • Low-wage workers suffer increased wage violations as unemployment numbers rise
  • The likelihood that workers are paid below the minimum wage increases from 10% to 22%
  • On average, minimum wage workers lose about 20% of their wage or $1.46 per hour

People of color and women affected more than white males

Researchers say employers target specific workers over wage violations. The results show:

  • Black workers and women are shortchanged in wages 50% more than white workers and men
  • Latinx workers are 84% more likely to experience minimum wage violations than white workers
  • Noncitizens are twice as likely to be affected compared to citizens
  • Noncitizen Latinx women are four times as likely to be targeted for wage violations than white male citizens
  • Noncitizen Black women experience wage violations 3 ¾ times more often than white males

Receiving the compensation you deserve

Even during robust economic times, workers in the food industry, construction, retail and domestic work can have a challenging time getting the promised income. That’s starkly true for noncitizens, women and people of color, especially during a recession.

If you have trouble getting paid what you are owed, an experienced employment attorney can help you take the necessary steps to recover back wages and overtime. A knowledgeable lawyer knows how to hold unscrupulous employers accountable.