INSTITUTE FOR POLICY RESEARCH

Why Labor Laws Fail to Protect Workers

New policy brief explores the gap between agencies’ powers and practices

Every year, about 17% of low-wage workers in the U.S. are paid less than the minimum wage they are legally owed. On average, they lose 20% of their income. Between 2021 and 2023, more than 11 million workers lost wages this way.

In the Los Angeles area, IPR political scientist Daniel Galvin and his colleagues found that one in four fast-food workers were paid below the legal minimum in 2024.

These numbers raise an obvious question: Why does wage theft keep happening, even in states with strong labor laws on the books?

A new IPR and Workplace Justice Lab policy brief, based on forthcoming research in Regulation & Governance, has an answer. Galvin and his co-authors show that passing a law is only step one. What happens next—whether an agency uses the power it’s been given—matters just as much.

“The law is not self-enacting,” Galvin said. “It has to be enforced.”

Powers on Paper, Not in Practice

Galvin directs the Workplace Justice Lab @ Northwestern University (WJL). The lab is part of a multi-institutional research partnership that includes Workplace Justice Lab @ Rutgers University and Pilipino Workers Center of Southern California. 

He and his team surveyed labor departments in all 50 states plus Washington, D.C. They uncovered a wide gap between what agencies are legally allowed to do and what they actually do.

Less than half of agencies with the power to investigate companies proactively—rather than just wait for complaints—use that power regularly. Roughly a quarter of agencies authorized to investigate retaliation against workers who speak up do so.

Part of the issue is that labor investigators are themselves often underpaid and overworked. In his dissertation research, Galvin’s colleague Jake Barnes of the Workplace Justice Lab @ Rutgers University revealed huge differences in how states hire and train these investigators. High turnover means some states are “reinventing the wheel every couple years,” Galvin said.

States also rarely learn from one another. Neighboring states with similar laws may never compare notes on enforcement strategies.

A Workforce with No Water Cooler

These challenges multiply in industries where workers don’t share a workplace. A recent WJL report examines California’s domestic worker population: more than 330,000 house cleaners, nannies, and home health aides.

The authors show that about one in five domestic workers were paid below minimum wage between 2014 and 2023. Among house cleaners, the rate was 32%; among childcare providers, it was 28%. Across the state, more than $282 million in wages are stolen from these workers every year.

Galvin calls domestic work “the epitome of the fissured workplace.” It lacks the qualities of workplaces where union power once took hold.

“Take manufacturing at mid-century: Thousands of people often worked at the same factory, doing very similar things,” he said. “When there were abuses, they often affected a lot of people simultaneously, those people talked to each other, shared information, and could act collectively to contest their exploitation.”

In contrast, workers in private homes are isolated. “People in identical jobs, you may never cross paths with,” Galvin said.

That makes it nearly impossible for enforcement agencies—or the workers themselves—to spot patterns of abuse or organize for change. Labor organizers like Ai-Jen Poo, co-founder of the National Domestic Workers Alliance, have had to get creative, visiting playgrounds and striking up conversations with nannies about their working conditions, building worker solidarity in unconventional ways.

Closing the Gap

WJL’s research points to several potential solutions.

First, agencies need what Galvin calls a “pro-enforcement” culture. Regulators should not befinding loopholes for industry or even acting as neutral referees, he argues, but actively enforcing the law to ensure compliance with hard-fought workers’ rights.

Second, Galvin noted, “It’s not just about more money or more staff; it’s about strategy.”

A reactive approach will give regulators only a partial view of the problem. Galvin explains thatstrong laws paired with a proactive enforcement strategy—“doing preemptive investigations of industries that you know to be rife with noncompliance”—cuts violation rates significantly. Strong laws or strong enforcement by themselves do not.

Some states are also experimenting with ways to insulate enforcement from politics, since labor commissioners typically serve at the pleasure of the governor. Illinois recently changed its law regulating temporary staffing agencies to let nonprofit, community-based worker centers sue abusive employers directly, without naming individual workers. That protects people who might otherwise be too afraid to come forward.

Local labor standards offices are another promising tool. San Francisco opened the first one in 2003; there are now dozens nationwide. Some tie enforcement to key levers, like zoning permits, to pressure noncompliant employers.

Researchers, too, have a role to play in debunking common arguments against strong labor standards. In 2024, California’s statewide $20 minimum wage for fast-food workers took effect. Galvin points to a new working paper by economist Arindrajit Dube of the University of Massachusetts Amherst showing this measure raised pay by about 7% with modest to no job losses, undercutting the claim that workers’ rights and economic development are necessarily at odds.

Building robust “communities of learning and practice” also helps spread strategies that succeed.

“That’s what we try to do at the Workplace Justice Lab,” Galvin said. “We bring together state, federal, and local enforcement agents…to share knowledge: what has worked, what hasn’t worked, what you can do within the law.”

Daniel Galvin is a professor of political science and IPR fellow. He is founding director of the Workplace Justice Lab @ Northwestern University.

Photo credit: iStock

Published: August 9, 2026.