Shining a Light on Wage Theft

In a worldwide cultural shift, crimes that used to slip by unnoticed are suddenly being seen — and not just seen, but seen as obvious and glaring problems. One of the best examples of this this year is wage theft.

Employers have long found ways to avoid paying employees all the money that they are owed. Last year a restaurant chain was caught in tip-shaving, a scheme in which a business owner illegally keeps a fraction of tips paid by customers to employees. The restaurant had to pay the stolen money back and pay a penalty. Several restaurant chains got caught paying servers less than minimum wage. There was no denying it — the numbers were right there in the payroll records. This week another restaurant chain got caught falsifying work time records to avoid paying workers overtime. These criminal schemes had gone on for decades, so why are they being called out now?

It is the sense of certainty that has changed. In the 1990s, it was harder to know what was going on when workers said they were being underpaid. All we could say for sure was that there seemed to be disgruntled workers everywhere we looked. Now there is more information, a clearer picture — just clear enough that a casual observer can say with some confidence that the employers must be crooks.

Besides the improved information, it may also be that some of the cultural baggage of the past is fading away. One of the peculiarities of the culture of the last millennium across most of the world was the worship of power. Kings and police took a hands-off approach when it came to crimes committed by large businesses and other stable institutions, and that is an attitude that is just now coming into question. It is a change in public sentiment that is forcing regulators and prosecutors to take a more literal approach to legal requirements when a business plan is based on thumbing its nose at the law.

Many businesses have come to depend on cheating their employees, customers, and suppliers in small ways, and many businesses won’t survive in the new era in which everyone can see what they are up to. As these problematic businesses fail, they will be replaced by new ones that take a more straightforward approach. For businesses that count on being able to cheat their employees, it will take only a few years of a strong labor market to force a change. When workers have a choice of where to work, they won’t choose to work for a company that systematically cheats them.

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