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Study: More workers “stiffed” on wages during a recession

| Jan 4, 2021 | minimum wage violation |

A recently-released study by an economic think tank concludes unscrupulous employers are more likely to steal wages from their workers during a period of economic downturn, leading to hourly employees losing up to one-fifth of their pay.

The research, by the Washington Center for Equitable Growth, says many low-wage workers were paid 10% to 22% below the minimum wage during the Great Recession of 2007 to 2009 – the three years the study focused upon.

Significant takeaways

Researchers say their findings are relevant to 2020’s economic turmoil caused by the ongoing pandemic. Key discoveries include:

  • Minimum wage violations increase as unemployment figures rise
  • Wage violation rates essentially mirror increases to the unemployment rate
  • On average, minimum wage violations cost workers $1.46 per hour

Certain groups shoulder more negative consequences

Researchers found that specific groups of low-wage workers were more highly impacted during the Great Recession, such as:

  • Noncitizens were twice as likely to experience wage violations
  • Black workers and women had their wage rights violated 50% more than white workers and men
  • Latinx workers were 84% more likely to experience wage theft than white workers
  • Noncitizen Latinx women were four times more likely to experience wage violations than white males

Shrinking job market and fear are the biggest factors

The study’s lead researcher says two main reasons exist why many employers try to get away with wage theft in 2020. First, jobs can be scarce during a recession as millions of people were laid off during the pandemic.

Second, those with jobs are less likely to come forward as there are fewer options to go elsewhere, making it extremely difficult to stand up to employers. Most are afraid that taking an employer to task will get them fired. In addition, enforcement is weaker as cities and states cut budgets due to the economic downturn.

Protections for minimum wage workers

Experts say dishonest employers pressure competitors that generally comply with wage and hour laws to shortchange their workers as well, which has made the problem accelerate during recent months.

With few exceptions, the Fair Labor Standards Act requires workers to be paid a minimum wage – in Ohio, the rate is $8.10 per hour. There are many different ways employers steal from their workers. If you believe your employer is guilty of wage theft, an experienced minimum wage violation attorney can help you receive the compensation you deserve.