KEY INSIGHTS
- About 190,000 Black workers were victims of wage theft last year
- Over the last decade, $22 million in wages have been withheld from Black workers in security and service industries
- Education on workers rights and worker-owned cooperatives can combat compensation issues
The Black workforce has seen many ups and downs during the pandemic, both creating more businesses and having higher rates of business closure, but one of the more significant threats to sustained employment for Black workers is wage theft. Last year, 196,000 Black workers were paid below minimum wage, according to a Statista report.
Some large companies have been accused of wage theft and have ongoing labor policy violations. The United States Postal Service arbitration records revealed that 250 managers in over 65 locations were changing workers’ hours, paying them over a nine year period. In extreme cases, workers had to consult labor unions if they received no paycheck.
Companies hiring in security work, gas stations and restaurants are also known to shorten minimum wages from workers. Center for Public Integrity, a nonprofit investigative newsroom in Washington, analyzed minimum wage and overtime violations from the U.S. Department of Labor, finding that major U.S. corporations like Circle K, Halliburton and GS4 Wackenhut took $22 million from Black workers.
Empty promises and avoiding repaying employees are typical for the offenders. Records suggest the Labor Department’s Wage and Hour Division, which investigates federal theft complaints, barely punishes regular offenders. The division also lets businesses bypass repaying employees their rightful money. Federal data provided shows workers are afraid to file a complaint or do not know their rights. There is also no breach of state wage laws or files of employee lawsuits.
Minorities are most likely to be cheated by companies, data from Policy Matters Ohio report suggests. While 10 percent of Black workers comprised the workforce, 16 percent were involved in wage theft. Hispanics made up three percent, but six percent was a part of wage theft.
Wage inequality can be traced back to the Jim Crow era when the federal government tried creating a national minimum wage and overtime pay. To persuade Southern Democrats to vote on the Fair Labor Standards Act of 1938, Northern Democrats left out laborers, nannies and housekeepers from the law’s protection, which grants the right to a minimum wage and time-and-a-half.
Earlier this year, President Biden signed an executive order to increase wages to $15 for federal cleaning professionals and maintenance workers effective by January 2022. The Administration is also taking strides to increase the minimum wage in public and private sectors overall.
The order also improves economic security for families and countermands decades of income inequality. A higher income and no-tipped minimum wage or a base wage to an employee who gets most of their compensation from tips, can be beneficial to people of color and women who are the primary income earners.
The University of Iowa Student Legal Services offers legal confidential counseling or file a theft complaint at the IOWA Division of Labor for workers who may not know money is being taken from their paychecks or who lack resources to fight the wage theft. Anyone who has experienced compensation theft can file a complaint with the U.S. Department of Labor.
While repaying workers is part of the solution to the wage gap, it does not solve issues between the employer and the employee. Empowering workers or worker-owned cooperatives would not only assist people in wealth and unemployment gaps, but Black workers can also help other marginalized groups in employment for women, immigrants and other workers.
Eliminating wage theft and improving overall labor relations must be a team effort between the worker, employer and U.S. government. Years of systemic racial discrimination can end as more opportunities and union support creates sustained income and a viable financial future for Black Americans.
