Wage Theft in a Recession: Unemployment, Labour Violations, and Enforcement Strategies for Difficult Times

Abstract

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, labour standards violations, and government enforcement capacities during periods of economic recession. In this article, we begin to draw out these connections. First, we 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 (CPS) data to estimate minimum wage violation rates by industry and demographic group. We find that minimum wage violations rose in tandem with rising unemployment, and were shouldered by some groups of low-wage workers more than others, and that they were unexpectedly affected certain industries more than others. We then use an analysis of internal complaint data filed with the San Francisco Office of Labour Standards Enforcement (OLSE) 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, we 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. Strategic Enforcement, Co-Enforcement, Great Recession, Wage Theft, Minimum Wage Violations