NY Daily News
Barack, attack labor abuses: Obama must crack down on wage theft
Thursday, November 20th 2008, 4:00 AM
As the nation slumps into recession, one of President-elect Barack Obama's key cabinet picks - one that could help millions of struggling Americans get on their feet economically - will be the choice for secretary of labor.
The next labor secretary must launch an all-out crusade against a national epidemic of wage-stealing, in which employers illegally underpay their workers to the tune of an estimated $19 billion a year.
That money belongs in the pockets and bank accounts of the secretaries, waitresses, fruit-pickers, seamstresses, construction workers and others who have earned it. But according to Kim Bobo, author of the new book "Wage Theft in America," a combination of lax enforcement and weak penalties let most employers break the law with impunity. Consider the mind-boggling number of ways to cheat employees:
From coast to coast, restaurants routinely withhold tips and wages from waiters, dishwashers, cooks and busboys and extend their hours without compensation. Surveys by the federal Labor Department in 1999 found that compliance with wage laws varied from a high of 70% in New Jersey to a low of 22% in New Orleans.
America's 700,000 garment workers get exploited routinely: According to Bobo, surveys show half of Los Angeles employees got minimum wage, and an estimated 65% of New York City garment factories violate wage laws.
Misclassification of low-level employees is a common way to steal from them: the typical maneuver is to call cashiers and other low-level workers "managers" in order to skirt laws requiring overtime when nonmanagers put in more than 40 hours per week.
In January 2007, Wal-Mart settled charges it stiffed more than 86,000 employees in this way, filching an estimated $33 million from them.
Cingular Wireless (now part of AT&T) settled last year with more than 25,000 employees owed more than $5 million.
In another 2007 case, CVS Pharmacy paid more than $226,000 to 51 workers to settle charges of failing to pay minimum wage and overtime to 51 workers.
Here in New York, a 2005 survey of 530 restaurant workers found that 59% had been cheated of overtime wages and 13% had received less than the minimum wage.
And the Fiscal Policy Institute, a labor-oriented think tank, estimates that 50,000 New York construction workers - about one in four - are either paid off the books or misclassified as an independent contractor not subject to wage laws.
Enforcement, the key to halting the wage-theft epidemic, is hit-and-miss. There are only 751 wage-and-hour inspectors in the Labor Department - about half the number on the job in the 1940s - to cover workplaces employing 130 million people.
That leaves the job to a patchwork quilt of individual states, labor unions and advocacy organizations. The results are uneven at best: New York Attorney General Andrew Cuomo, like his predecessor Eliot Spitzer, has aggressively pursued cases, as has the state Labor Department.
But that's not true everywhere: Florida, for instance, has no labor department.
And even when employers get caught red-handed, the usual remedy is simply to repay the stolen wages.
As Obama and the Democratic-led Congress struggle to cure the nation's financial crisis, they should recognize that beefing up the Labor Department to enforce existing laws could put billions where they are most needed: in the hands of hardworking middle-class families.
That would be the best economic recovery package of all.