Millions of workers illegally paid less than minimum wage, study suggests

Study unveiled by Labor Department exposes violations of wage laws

Published December 4, 2014 2:11PM (EST)

                (iStockphoto/Alexey Stiop)
(iStockphoto/Alexey Stiop)

A study released by the Labor Department on Wednesday suggests that millions of wage and salary workers nationwide are illegally being paid less than the minimum wage.

The study, conducted by the Eastern Research Group, looked at data in two states: New York and California. In each state, 300,000 workers received less in hourly pay than the minimum wage required. The study, which used data from 2011, found that the restaurant and hotel industry was the worst violator of wage laws. Educational and health services ranked second in violations, while retail and wholesale ranked third.

In 2011, New York Times labor reporter Steven Greenhouse notes, New York's minimum wage was $7.25 an hour, while California's was minimum was $8. The state's minimum wages are now $8 an hour and $9 an hour, respectively.

What does the study tell us about wage violations elsewhere? If the nationwide rate of minimum wage violations were just half the rate in the two states, more than 2 million workers received less than either the federal minimum wage or their states' minimums, Greenhouse reports.

Labor Secretary Thomas Perez is pledging to crack down on wage violations in the wake of the study. Perez plans to deliver a speech before the Center on American Progress today in which he will say, “When we crack down on unscrupulous employers, we send a strong message to similar employers about our vigilance."

“We create ripple effects, as a single investigation can resonate throughout that sector, influencing employer behavior and reforming a race-to-the-bottom culture," Perez will add.

The release of the study comes as labor advocates fight for higher wages across the country. While Republican obstruction has effectively killed the prospect of a federal increase, states and localities of varying political stripes are passing minimum wage increases. The Chicago City Council voted this week to raise the city's minimum to $13 an hour by mid-2019, indexing the wage to inflation thereafter. Last month, voters in South Dakota, Nebraska, Arkansas, and Alaska approved wage increases in their states, even as they opted to send conservative Republican senators to Washington. Illinois voters also passed a non-binding referendum calling for the state's minimum to increase from $8.25 an hour to $10 an hour by January 1, while the state tossed out Democratic Gov. Pat Quinn in favor of Republican Bruce Rauner, who previously endorsed reducing the state's minimum wage to $7.25 an hour, the current federal minimum.

By Luke Brinker

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