Deterring "Wage Theft": Alt-Labor, State Politics, and the Policy Determinants of Minimum Wage Compliance (WP-15-08)
In recent years, inchoate coalitions of workers' rights groups (sometimes called "alt-labor") have responded to growing evidence of exploitation in the workplace and policy drift at the national level by launching campaigns to enact more protective legislation at the state level. These policy campaigns have been formative for the development of alt-labor and signal that the thrust of labor politics may be changing, increasingly moving out of the workplace and into the political arena. But do any of these policies actually work? The existing literature has long concluded that while stronger penalties should make a difference, in actuality, they do not. But by limiting the analysis to the relatively weak national-level regulatory regime, previous scholarship has eliminated all variation from the costs side of the equation and overlooked the rich variety of wage and hour laws that exist at the state level. Using an original dataset of state laws, new estimates of minimum wage violations, and difference-in-differences analyses of a dozen recent "wage theft laws," this study finds that stronger penalties can serve as an effective deterrent against wage theft, but the structure of the policy matters a great deal, as does its enforcement.