"How damning is wage theft?" 

For the past forty years, many American workers have not received fair wages due to economic policies that have kept hourly wages low. As a result, achieving a middle-class lifestyle has become harder. Most workers have seen their hourly pay stay the same or even go down. This is especially true for the lowest-paid workers, who sometimes have part of their paychecks stolen by dishonest employers.

Wage theft happens when employers do not pay workers all the money they are owed by law. This is a common and serious problem that affects millions of workers in the U.S. each year. Wage theft can include not paying promised wages, paying less than the minimum wage, not paying for all hours worked, or not paying overtime. This takes billions of dollars away from workers every year and leaves many in poverty. Wage theft doesn't just hurt the affected workers and their families; it also lowers wages for other workers in the same industries. Many low-income families who experience wage theft have to rely more on public assistance, putting more strain on safety net programs and making it harder to reduce poverty.

Measuring wage theft is difficult because it can happen in many ways, not all violations are reported, and there is limited public data. However, recent studies have tried to measure the harm caused by wage theft. The Economic Policy Institute, the EPI, which is an independent, nonprofit think thank, used data from the Current Population Survey to look at wage theft through minimum wage violations—when workers are paid less than the minimum wage. 

The report focused on the 10 most populous states: California, Florida, Georgia, Illinois, Michigan, New York, North Carolina, Ohio, Pennsylvania, and Texas, while looking at those states to consider their specific minimum wage laws and exemptions. The data from these states helped understood the severity of wage theft and the people affected by it. Since these 10 states make up more than half of the U.S. workforce, these findings painted a horrific picture of wage theft across the country.

Key findings: In these 10 states, each year, 2.4 million workers who are covered by minimum wage laws are paid less than the minimum wage—about 17% of the low-wage workforce. Workers affected by these violations are underpaid an average of $64 per week, losing about $3,300 annually, which is a significant portion of their earnings.

Young workers, women, people of color, and immigrant workers are more likely to be paid less than the minimum wage because they often work in low-wage jobs. However, most workers with wages below the minimum wage are over 25, native-born U.S. citizens, and nearly half are white. More than a quarter have children, and just over half work full-time.

In these 10 states, workers are most likely to be paid less than the minimum wage in Florida (7.3%), Ohio (5.5%), and New York (5.0%). The worst underpayment happens in Pennsylvania and Texas, where workers lose over 30% of their pay. 

The poverty rate among workers paid less than the minimum wage in these states is over 21%—three times higher than for minimum-wage-eligible workers overall. If these workers were paid what they are owed, less than 15% would be in poverty.

The findings by the EPI, highlighted the serious problem of wage theft in the U.S. Accurate measurement of wage theft is challenging because many incidents go unreported, and enforcement is limited. However, even with the best available data, the scale of wage theft is significant. Workers in the 10 most populous states lose $8 billion annually. If this is true nationwide, bad employers steal around $15 billion annually from their employees due to minimum wage violations alone.

This amount exceeds the value of property crimes in the U.S. each year, which was $12.7 billion in 2015. Unlike property crime, wage theft does not receive as much attention or resources for enforcement. Lawmakers should consider whether enough is being done to protect workers' economic security at their jobs. Wage theft also affects public costs because stolen wages mean less payroll and income tax revenue and more reliance on public assistance programs.

Improving wages for low-income workers by raising the minimum wage or strengthening their bargaining power could lead to public savings. Eliminating wage theft would mean reclaiming money stolen from employees and taxpayers. The loss of income for wage theft victims also weakens consumer demand, which drives the U.S. economy. Most workers affected by minimum wage violations come from low-income families that spend all their income to meet their needs. Improving their financial situation could lead to better health, education, and social mobility for these households.

Stronger wage and hour laws and better enforcement can help reduce wage theft. Employers who commit wage theft lower their labor costs unfairly, which hurts law-abiding businesses. No business should gain a competitive edge by cheating its employees. Wage theft also suppresses wage growth for a larger group of workers, adding to the economic challenges faced by American workers over the past four decades. Lawmakers should ensure that workers are paid all the wages they have earned to support the economic health of American households.

1. How might the economic policies that have kept hourly wages low in the U.S. compare to similar policies in Japan, and what are the potential impacts on the middle class in both countries?

2. Wage theft is a significant issue in the U.S., affecting millions of workers annually. How prevalent is wage theft in Japan, and what forms does it typically take?

3. In the U.S., wage theft disproportionately affects young workers, women, people of color, and immigrants. In Japan, which demographic groups are most vulnerable to wage theft, and why?

4. Considering the challenges in measuring wage theft due to underreporting and limited data, what steps could Japan take to better quantify and address this issue within its own workforce?

5. The text highlights the broader economic impact of wage theft in the U.S., including reduced consumer demand and increased reliance on public assistance. How might wage theft similarly affect Japan's economy, and what measures could be implemented to mitigate these effects?