Wage Theft Comes to America: The Facts That Drive the Sanders Revolt

In this Nov. 16, 2009 photo, Stephen Guymon, left, of Twin Falls, Idaho, and Sanferd Glasses, of Kayenta, Ariz., separate pac
In this Nov. 16, 2009 photo, Stephen Guymon, left, of Twin Falls, Idaho, and Sanferd Glasses, of Kayenta, Ariz., separate packed boxes for final shipping inside the 800,000 sq. ft. Amazon.com warehouse in Goodyear, Ariz. (AP Photo/Ross D. Franklin)

In Denmark, companies like McDonald's and Burger King pay workers $20 an hour plus benefits, and don't bat an eye. These same companies, which are actually based in the U.S., pay American workers less than $9 with no benefits.

What is going on here?

The answer is simple and painful -- wage theft. In America, corporations can get away with stealing our wages, but in Denmark (and elsewhere), they can't. Virtually the entire bottom 95 percent of American wage earners are victims of wage theft ... perhaps including you!

Wage theft is a reality understood by every immigrant day laborer standing on a street corner looking for a job with a drive-by construction or landscaping contractor. Far too many contractors "hire" these workers and then simply refuse to pay after the work is done.

Workers who are undocumented have little recourse. If they report the theft, they might beturned in to U.S. Immigration and Customs Enforcement (ICE). So most people just go back to their usual corner, hoping to luck out with a more scrupulous contractor the next time around. Workers who are lucky and resourceful enough to be affiliated with an immigrant worker center like the Workers Justice Project in Brooklyn, NY, can find jobs through its hiring hall, where contractors agree to pay decent wages and provide safer working conditions.

Fast-food franchise managers sometimes steal wages by fiddling with workers' time logs, erasing any evidence of overtime. So much for the time-and-a-half pay workers are entitled to by law for OT. You don't like it? Leave.

However, if the Fast Food Forward campaign has your back, the threat of protest and legal action might force your boss to pay up. Managers who try stealing OT in Denmark have to worry that the union will respond by shutting down the entire chain.

You might think that U.S. workers could go to court to claim their stolen wages. Sometimes they do. Sometimes they even win... and then are unable to collect. Employers go out of business, hide assets or find other ways to worm their way out of paying what they owe. According to a 2015 report about wage theft in New York City by a coalition including the Legal Aid Society, the Urban Justice Center and the National Center for Law and Economic Justice, "Our research identified at least $125 million in judgments and orders, providing a glimpse into the scope of the wage collection problem in New York."

And then there are the Amazon warehouse workers who must line up for 25 minutes to pass through "egress security" screeners to prevent "inventory shrinkage." Does Amazon pay people for this time? No, says Amazon, because this activity is not "integral and indispensible" to the job. The Supreme Court now agrees. So time workers spend helping the company reduce theft moves into the legalized wage theft column.

Grand Larceny?

How would you feel about losing 15 percent of your wages to theft? According to the report "Broken Laws, Unprotected Workers," that's the norm for low-wage workers in New York, Chicago and Los Angeles. The authors write:

"The average worker lost $51, out of average weekly earnings of $339. Assuming a full-time, full-year work schedule, we estimate that these workers lost an average of $2,634 annually due to workplace violations, out of total earnings of $17,616. That translates into wage theft of 15 percent of earnings."

The Economic Policy Institute (EPI) uses those numbers to provide a national estimate:

"The total annual wage theft from front-line workers in low-wage industries in the three cities approached $3 billion. If these findings in New York, Chicago, and Los Angeles are generalizable to the rest of the U.S. low-wage workforce of 30 million, wage theft is costing workers more than $50 billion a year."

If this is true, then wage theft is the largest form of larceny in our economy -- more than the $13.6 billion we lose each year in stolen cars, other larcenies, burglaries and robberies (using 2012 figures from the FBI ). Fifty billion dollars a year is enough to provide over 1.2 million people with jobs -- and pay them $20 an hour.

Not me?

You may be thinking "Thank God I'm not a low-wage worker. Nobody is stealing my pay."

Or are they?

It may be that your employer isn't tampering with your overtime records or flat-out stiffing you. But your wages are being stolen nonetheless -- subtly. Employers and their Wall Street backers have developed sophisticated legal ways to remove dollars that should be in our paychecks. And not just a few dollars, but about half of what we've earned.

Exhibit #1: The Productivity/Wage Gap

To explose this hidden larceny, we need to understand the concept of productivity and how we measure it in our economy.

Productivity, a word near and dear to every manager's heart, has nothing to do with how much we are paid. It's a measurement of how much we produce in a given hour. We make managers happy when we produce a lot every hour, either individually or collectively. In general, in a productive economy, we collectively have the knowledge, skill, technology and organization we need to produce more each hour. Productivity is the key to the wealth of nations: The more goods and services we produce per hour, the higher our standard of living.

Of course, this crude measurement doesn't account for important qualities that don't have price tags -- like a sustainable environment and a general sense of well being. But usually, countries with the highest level of productivity are better able to protect the public's health and the environment.

As the chart below shows, productivity in the U.S. economy (the line on top) has risen steadily since WWII, climbing in 65 of the last 70 years. Today we produce two and a half times more goods and services per hour of labor than we did in 1947.


For generations, as productivity increased so did real wages (that's the line at the bottom of the graph). "Real wages" is what we earn after accounting for inflation over time. As we can see, from WWII until the mid-1970s, productivity and wages were virtually inseparable. As productivity increased, so did wages.

In fact, in universities across the country, economists once taught that this entwinement was an economic law. They thought that if wages started to drop relative to productivity, competitive market forces would push them back up again. But, alas, as we can see, during the mid-1970s, this iron law was repealed.

But until then, wages rose steadily for a quarter century. And because they rose in tandem with productivity, profits did just fine: About two-thirds of workers' productivity gains (that is, the value of the goods they produced) went to wages, but the rest went to profits, research and development, and the replacement of plant and equipment.

Since the late 1970s, the average real wage for most of us has stalled. Productivity is still rising at a quite healthy pace, but we workers aren't getting our share of the value of what we produce. Corporate elites are siphoning off revenues for themselves -- and cutting their investment in facilities, equipment, research -- and workers. Had we continued to get our fair share of productivity gains, the average American non-supervisory production wage would be $1,249 per week in 2014. That's almost double the current average weekly wage, $687 (measured after inflation in 2012 dollars).

Think about how you'd be living with twice your current wages (like a Dane!).

What happened? Where did all that productivity money go?

We can directly blame this wage theft on Wall Street. The U.S. government began deregulating the financial industry in the late 1970s. Under the new laws and regulations, financial maneuvers that once would have landed financiers in jail now put them in penthouses.

The new rules gave financiers a myriad of ways to siphon wealth away from corporations -- that is, from our pockets to theirs. And they were outrageously successful. Now it's 829 times the average wage.


So where did our productivity money go? They took it.

But is this really theft?

Many people might think it's extreme to call the disappearance of our productivity increases a form of theft. Wouldn't that require breaking the law?

According to the dictionary, theft is defined as

"the act of stealing; the wrongful taking and carrying away of the personal goods or property of another; larceny."

What bosses are doing when they abscond with our productivity gains might not be illegal. But a very good case could be made that it constitutes "wrongful taking."

Just about everything that's bad about our economy stems from this "wrongful taking." As economic elites siphoned off our wages, our standard of living stopped improving - and by many measures, worsened. After capturing all that income, Wall Street went on a gambling spree, stoking the most profitable financial casino in world history. And then came... the crash of 2008. Eight million blameless workers lost their jobs in a matter of months. Long-term unemployment reached the highest levels since the Great Depression. The government spent trillions in cash and loans to bail out the biggest casino banks, the ones that had caused the crash in the first place. And meanwhile, inequality just kept on rising.

The American Dream that so mesmerized working people around the globe is no more. And it will never return until we start doing something about that "wrongful taking."

Les Leopold is the director of the Labor Institute in New York. His latest book is Runaway Inequality: An Activist's Guide to Economic Justice (Labor Institute Press , 2015). For bulk orders contact him at LesLeopold@aol.com.