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Wage Theft in a Recession: Unemployment, Labor Violations, and Enforcement Strategies for Difficult Times (WP-21-09)

Janice Fine, Daniel Galvin, Jenn Round, and Hana Shepherd

During the COVID-19 pandemic and accompanying recession, millions of low-wage workers have become increasingly vulnerable to exploitation. Limited scholarly attention, however, has been paid to the relationship between rising unemployment, labor standards violations, and government enforcement capacities during periods of economic recession. In this article, the authors begin to draw out these connections. First, they turn to the case of the Great Recession of 2008-2010 in the United States to examine the relationship between rising unemployment and minimum wage violations, using Current Population Survey data to estimate minimum wage violation rates by industry and demographic group. They find that minimum wage violations rose in tandem with rising unemployment, were shouldered by some groups of low-wage workers more than others, and unexpectedly affected certain industries more than others. The researchers then use an analysis of internal complaint data filed with the San Francisco Office of Labor Standards Enforcement to illustrate that even during non-recession periods, the number of complaints received by industry are in some cases wildly disproportionate to the estimated violation rates by industry. This underscores the shortcomings of the complaint-based enforcement model, which is by far the most common mode of workplace regulation in the United States. Finally, they discuss how this empirical evidence points to the importance of developing alternatives to complaint-based models of enforcement—in particular, strategic enforcement and co-enforcement—especially during periods of high unemployment.

This paper is published in the International Journal of Comparative Labour Law and Industrial Relations.

Janice Fine, Professor of Labor Studies and Employment Relations, Rutgers University

Daniel Galvin, Associate Professor of Political Science and IPR Fellow, Northwestern University

Jenn Round, Senior Fellow, Center for Innovation in Worker Organization, Rutgers University

Hana Shepherd, Assistant Professor of Sociology, Rutgers University

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