Wage Theft and Class War


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The Demos blog has a provocative post comparing the scale and punishment for wage theft and shoplifting. A new study by the Economic Policy Institute finds that the value of what employers steal from workers every year is comparable to what shoplifters steal from retailers, yet the crimes are not treating as equally grave and the punishments are no where near equal:

[T]he American justice system is skewed in favor of power and privilege, treating the crimes of the powerful, such as stealing from employees’ paychecks, far more leniently than crimes committed by those with less power, such as shoplifting.

Drawing on data from a rigorous new study of minimum wage violations by David Cooper and Teresa Kroeger at the Economic Policy Institute, we compare the dollar value of shoplifting with the value of minimum wage violations, and find that they are roughly comparable. Each year between 2013 and 2015, retailers lost approximately $14.7 billion to shoplifting, while employers stole an estimated $15 billion through one form of wage theft alone: paying less than the legal minimum wage.

Minimum wage violations and shoplifting are crimes of similar scale, yet that’s where the similarities end. Despite the way that wage theft devastates working Americans and their families, pushes hundreds of thousands of people into poverty, robs states and cities of tax revenue, and places law-abiding businesses at a competitive disadvantage, we find that dramatically more resources go into detecting and deterring shoplifting than into preventing wage theft.

When wage thieves are caught, they also face a starkly different experience from shoplifters. If a shoplifter steals more than $2,500 in merchandise, he or she can face felony charges in any state in the country. Many states impose felony charges for stealing much less valuable merchandise. Yet criminal penalties of any kind are very rare when it comes to wage theft. Even when millions of dollars are stolen from employee paychecks, only mild civil penalties are applied under federal law.

I would make a theoretical comparison that draws the issue into even sharper relief. Wage theft is notoriously prevalent in the restaurant industry and it’s an industry where workers have numerous opportunities to settle that score in … um … less than official ways. According to Mother Jones, between 2010 and 2012, the Wage and Hour Division of the Department of Labor conducted nearly 9,000 investigations in the restaurant industry, and discovered that 83.8 percent had some kind of wage and hour violation.

Restaurants are almost uniquely poised to incentivize wage theft. There is pressure for servers to do side work off the clock. The concentrated pressure of the dinner rush in the middle six hours of a shift makes it hard to take mandated breaks, the logic of preparing for service can mean line cooks come in early to prep off the clock to make their own lives easier, because the boss won’t pay them to come in early enough to get as prepared as they’d like to be.

At one of the last restaurants I worked, management’s expectations were so out of whack that it wasn’t uncommon to see a line cook come in and work an hour on his own time to get his station prepped to the hilt so that service would go smoothly. Another large restaurant I had worked required every employees to sign in and out in a logbook to affirm that we had taken our mandated breaks because the company had been found guilty of forcing workers to skip breaks. That restaurant was in Oregon where the law requires an unpaid 30 minute meal break and two paid ten minute rest breaks. This was a big restaurant with 150 employees and 30-50 on any given shift, part of a chain of 30 or so locations. Stealing twenty minutes a day of free labor from each employee must have added up to a serious chunk of change. It also makes life harder on older employees who can keep up with their younger peers as long as they can sit down for a few minutes every few hours.

But the main reason why restaurants are so ripe for wage theft is the sub-minimum wage for tipped employees. In most states while the minimum wage is the same as the federal minimum of $7.25 or higher, the minimum wage for tipped employees is lower, much lower. The federal law sets the wage for tipped workers at a minimum of $2.13 per hour, as long as the hour wage plus tip income equals at least the minimum wage of $7.25. This generously endows server staff with the right to haggle with their boss every day, if they work at a restaurant where tips can be scant or shifts are slow.

If you are a waitress working the graveyard shift at an IHOP or Waffle House and your supervisor isn’t proactive in making sure that your wages plus tips for each shift are greater than $7.25 and hour, then it’s on you to approach them every day and ask, demand, inquire whether you can get paid what you are owed. If your supervisor isn’t the kind of person that is proactive on this front and you need the job because you have limited prospects, its pretty likely that you just suck it up and eat the difference between what you made and what you are owed.

A study by the Restaurant Opportunity Center United of the Boston restaurant industry found, among other things, widespread wage theft:

Nearly half of workers that worked over 40 hours a week in the past 12 months reported being paid less than the legally mandated overtime rate, in violation of state and federal laws. Thirty-eight percent of restaurant workers worked off the clock without pay in the last 12 months, and nearly six in ten workers say they worked 8 hours without a paid break in the last 12 months.

Now, let’s imagine that a waitress decides that it’s not worth haggling with her supervisor everyday over the $10 a day the restaurant owes her to fill the gap between her $2.13 wage, her tips and the $7.25 an hour she is supposed to be making. But then she makes the wrong, but perhaps understandable decision to start skimming the $10 a day by pocketing the check for a table or two each day that pays in cash that she avoids ringing in. After 100 shifts, she has stolen enough from her employee in my state of Oregon to be charged with class C felony – theft in the first degree if she was caught. This carries a maximum penalty of five years in state prison and a fine not to exceed $125,000.

Let’s say she is caught and charged, while at the same time making a counter charge that her employer stole an equal amount of money from her over the same period of time, and she has the records to back it up (a highly improbable scenario, I realize.)

She will be arrested by the local police, charged put in jail pending trial unless she can post bail. Posting bail when you are making so little that $10 a day makes a substantial difference to income is going to be either off the table or a major hardship.

Her employer, on the other hand, will be not be arrested and put in jail pending trial or forced to post bail. They will be facing an investigation by the Wage and Hour Division of the Department of Labor. A bureaucrat will show up to investigate records. If they are found guilty, this is a considered a very minor infraction and they will face a small fine.

While in extremely egregious cases, jail can be a penalty for wage theft, that’s extremely rare. Consider this case which was presented as a cautionary tale:

In a case involving a Puerto Rican nursing home, the Wage and Hour Division ordered the company and one of its officers to pay nearly $20,000 in back wages and interest for FLSA violations. It was the second time the officer, Elba Garcia Hernandez, was the subject of an FLSA investigation. Separately, the US Department of Labor assessed the defendants $1,540 in civil money penalties for willful and repeat violations.

Did you get that? The penalty for stealing $20,000 was to pay it back with interest PLUS a civil penalty of 7.7% of what they stole. And this was considered an especially stiff penalty because they were repeat offenders.

Imagine if the penalty for stealing a car was that you had to give back with a full tank of gas PLUS a gift certificate for a car wash… because this wasn’t the first time you’ve been caught stealing cars.

Imagine what diabolical “punishment” the DOL would come up with for a restaurant the first time they are found guilty of stealing $1000 from a waitress.

That’ll teach’em!

 Meanwhile, the waitresses life has been turned completely upside down for making the same bad decision.

The marxists have a word for they way bad behavior by the poor and powerless is systematically criminalized, while bad behavior by the rich and powerful is systematically excused. It’s called Class War. Here’s something I wrote a few years ago in response to the over the top, but completely typical response of Mexican police in busting up a farmworker’s picket and how it illustrated Class War in action:

Why is it that the police don’t show up to bust heads when a woman working in the fields files a complaint about sexual harassment? Why does it seem normal that police will beat up workers for standing in the wrong place, but they won’t beat up their bosses for denying workers water or the proper safety equipment for working with pesticides? Why don’t the cops show up and beat up your landlord when he refuses to bring your sewer and plumbing up to code?

The answer lies in the concept of hegemony. Hegemony was a refinement of Marx’s concept of superstructure developed by the Italian marxist Antonio Gramsci. According to Gramsci, the powerful maintain their power through culture, through manufacturing the consent of the governed. Aspirational advertising, toadying political commentators, Hollywood myth-making, etc. Our roles become internalized and power relationships that are politically determined are presented back to us as the natural order. But when the lower orders withdraw their consent, the apparatus of the state is readily turned against them in the form of the police, courts, and army (or National Guard, cough, Kent State, cough). In this state of affairs capitalism turns from a laissez faire market of goods and services to a more efficient, self justifying form of feudalism.

The system is working at its most sophisticated when it’s no longer a matter of the cronyism of the local power structure. We are no longer talking about the Sheriff of Nottingham or a southern mill owner calling upon a Jim Crow sheriff to run bust a union. No phone calls, personal relationships or kickbacks are required. The cops simply see it as part of their normal duties to defend the owners of the means of production from everyone else.  You know the system is working when the police turn on strikers and protesters, not for breaking the law, but for withdrawing their consent, refusing to play their role. It’s the lack of proportion in the response to the crime that gives away the game.

Our symmetrical but not at all symmetrical scenario of a waitress and a restaurant stealing the same amount from each other highlights how Anatole France’s classic statement of the class war inherent in supposedly neutral laws actually understates the situation.

” The law, in its majestic equality, forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal their bread. “

Further reading:

• The Farmworker Strike in San Quintin is a Perfect Illustration of How Class War Works
• The right to haggle with your boss over your wages, every day.
• New York Times FTW on a real minimum wage for tipped employees

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