Nate Linder

York College of Pennsylvania

Review of Literature
Wage theft is a type of theft that occurs whenever an employer fails to pay an employee
their full, legally-contracted wages. Wage theft can take many different forms, such as minimum
wage violations, unpaid overtime, off-the-clock violations, employee misclassification, and, in
recent years, it has been estimated to cost workers over $15 billion annually (Cooper & Kroeger,
2017).
Despite this, wage theft remains a somewhat insidious crime that frequently takes place
out of the public eye. While American workers are more likely to become victims of wage theft
than any other type of theft, many workers don’t know their full rights surrounding fair-wage
payments and therefore have trouble recognizing and reporting wage theft when it occurs
(Meixell & Eisenbrey, 2014). Because of this, it is important for researchers to more thoroughly
examine and understand the epidemic of wage theft in the U.S. so that policymakers and
business leaders have the tools and information available to effectively cut down and deter this
practice.
Current studies related to wage theft have focused on two overarching themes: the
process of wage theft and wage theft deterrence or prevention. Researchers looking at the
process of wage theft have aimed to understand how the crime unfolds, from beginning to end.
They analyze firm and managerial motives for wage theft, what forms this crime most frequently
takes, who is likely to become a victim, and what recourse these victims have. All of this paints a
broad picture of the process of wage theft that can allow the public to fully understand when and
how it occurs.
The second trend that has emerged in wage theft research is an analysis of the attempts to
reform legal and business systems to prevent and deter wage theft. Research in this category
builds upon the knowledge gained from those analyzing the crime’s process in order to come up
with solutions. Scholars in this field frequently analyze wage-theft-related laws that have been
passed by local municipalities to see where these laws have been successful and where they may
need improvement. Some researchers have also looked at the role that community groups can
play in reforming the system. While they may propose different solutions based on factors such
as locality, all of these researchers are looking at every tool that the public has at their disposal to
combat wage theft with the intent of finding the best solution for workers.
Current research has found that incentives to commit wage theft can exist at both an
individual level within firms and at a higher, business-wide level. An analysis of the profiles of
businesses found guilty of wage theft discovered that when stronger managerial bonuses and
incentives exist within a firm, that firm is more likely to commit wage theft (Raghunandan,
2011). When managers are given bonuses for activities such as cost-cutting, they are more likely
to resort to extralegal methods to achieve these goals.
 Additionally, researchers have found that businesses can benefit across the board by
committing wage theft. In Massachusetts, construction firms were able to reduce their building
costs by 30% by misclassifying workers as independent contractors rather than full-time
employees, a move that allowed them to avoid paying taxes on workers’ wages and not
contribute to worker compensation funds (Juravich et al, 2015). Another group of researchers
discovered that when minimum wage increases pass in a locality, instances of wage theft
increase for a period of time as firms look for ways to reduce their newly increased labor costs
(Clemens & Strain, 2022). All of these practices can be attributed to what Petrescu-Prahova and
Spiller referred to as a competitive and deregulated “gloves off” economy that encourages firms
to take advantage of lower-income and marginalized workers to gain an advantage over their
competitors (2016).
Researchers have also looked into the victimology of wage theft in order to create a
profile of the body of workers who are most likely to become victims of this crime. Both the
Economic Policy Institute and the Work and Occupations journal reported from their research
that women, people of color, and immigrants are more likely to become victims of wage theft
than other groups (Cooper & Kroeger, 2019; Petrescu-Prahova & Spiller, 2016). In particular,
undocumented immigrants are especially vulnerable to this crime because many victims within
this group have limited recourse options to seek justice and fear deportation if they come forward
with a wage-related complaint.
The Economic Policy Institute also found that lower-wage workers are the most likely
income group to have their wages stolen and that the results from this can be devastating to their
livelihood. Minimum wage victims of wage crime are three times more likely to live under the
poverty line than minimum wage workers who are being paid their legally-contracted wages
(Cooper and Kroeger, 2019). Overall, the culmination of research related to wage theft
victimology shows that an intersection of multiple different identities such as gender, race,
income, and immigration status can cause certain marginalized workers to be at a much higher
risk of this crime than others.
While these researchers continue to provide invaluable information about how the
process of wage theft occurs, another group has begun the next step in addressing this crime and
is beginning to look at how wage theft can be prevented. An article published in the Washington
Law Review analyzed the five most common categories of wage theft laws (authorization of
complaints, anti-retaliation, creation/strengthening of penalties, joint employer responsibilities,
and information mandates) and found that while these laws all show some promise, they can all
frequently fail when enforcement is lax or when vulnerabilities in worker-protections form
because these measures aren’t all implemented in unison (Lee & Smith, 2019).
Additionally, some researchers have analyzed wage-theft prevention from a more local
city level. This research has shown that some solutions, such as coordinating multiple agencies
together, building specific wage-theft ordinances within cities, and putting stronger sanctions on
misconduct by employers show great promise for effectively preventing this crime (Cowgill,
2016; The National Municipal Policy Network, 2014)
 Finally, some researchers have looked for outside-the-box solutions. The Economic
Policy Institute, while detailing general methods of protecting workers’ rights, suggested that
local municipalities set a strong example for other businesses by paying government workers
living wages and by exercising greater discrimination in who they hire as contractors (Gerstein &
Gong, 2022). Groups such as the National Employment Law Project have also begun to assist
activist groups in the fight against wage theft by creating guides that detail effective policies
activists can begin to push for (2011).
While not as much research has been done in this area, some scholars have begun to look
not at the anti-wage theft laws themselves, but instead at their passage through legislatures.
Through this research, it has been found that in areas with a stronger union density and with
more worker centers, wage theft laws are more likely to make their way onto legislative agendas
(Doussard & Gamal, 2016).
Overall, this research shows that to effectively combat wage theft, it is important to have
a thorough understanding of both the crime’s process and what methods are available to combat
it. This review of literature also shows that because wage theft can manifest differently in
different areas, it may be best understood and fought from a local level. While Massachusetts’s
residential construction boom allowed businesses to take advantage of misclassification to cut
their costs, an area that just passed a local wage increase may instead be at a higher risk of
employer minimum wage violations. Because these areas face different problems, the solutions
implemented likely need to be different as well.
Using tools such as the Good Jobs First Violation Tracker and first-hand local worker
experiences, researchers may be able to paint a picture of the area that they reside in specifically.
Then, after gaining this knowledge, they can propose and evaluate effective solutions. This can
be a more effective way of fighting wage theft not only because it addresses specific issues, but
also because it allows the laws to be passed more easily by avoiding larger, national, ideological
hostilities and lobbying groups.
 Bibliography:

Clemens, J., & Strain, M. (2022). Understanding “wage theft”: Evasion and avoidance responses
to minimum wage increases. Labour Economics, 79. https://doi.org/10.3386/w26969

Cooper, D., & Kroeger, T. (2017, May 10). Employers Steal Billions from Workers Paychecks
Each Year. Economic Policy Institute.
https://www.epi.org/publication/employers-steal-billions-from-workers-paychecks-each-y
ear/

Cowgill, J. (2016). A review of local wage theft ordinances, Data Practices, & Evaluation
Procedures. A Review of Local Wage Theft Ordinances, Data Practices, & Evaluation
Procedures. https://conservancy.umn.edu/handle/11299/180151

Doussard, M., & Gamal, A. (2016). The rise of wage theft laws. Urban Affairs Review, 52(5),
780–807. https://doi.org/10.1177/1078087415608008

Gerstein, T., & Gong, L. (2022, June 13). The Role of Local Government in Protecting Workers’
Rights. Economic Policy Institute.
https://www.epi.org/publication/the-role-of-local-government-in-protecting-workers-rights-
a-comprehensive-overview-of-the-ways-that-cities-counties-and-other-localities-are-taking
-action-on-behalf-of-working-people/

Good Jobs First. (n.d.). Violation tracker. Violation Tracker.

Juravich, T., Ablavsky, E., & Williams, J. (2015, May 11). The Epidemic of Wage Theft in
Residential Construction in Massachusetts. UMass Amherst.
https://www.umass.edu/lrrc/research/working-papers-series/wage-theft

Lee, J. J., & Smith, A. (2019). Regulating Wage Theft. Washington Law Review, 94(2).
https://doi.org/https://digitalcommons.law.uw.edu/wlr/vol94/iss2/6

Meixell, B., & Eisenbrey, R. (2014, September 11). An epidemic of wage theft is costing workers
hundreds of millions of dollars a year. Economic Policy Institute.
https://www.epi.org/publication/epidemic-wage-theft-costing-workers-hundreds/

National Employment Law Project. (2011, January). Winning wage justice: Policies and
practices for fighting wage theft. National Employment Law Project.
https://www.nelp.org/campaign/winning-wage-justice-policies-practices-for-fighting-wage-
theft/
The National Municipal Policy Network. (2014). City strategies to combat wage theft and
empower workers - local progress. Local Progress.
https://localprogress.org/wp-content/uploads/2013/09/City-Strategies-to-Combat-Wage-Th
eft-and-Empower-Workers.pdf

Petrescu-Prahova, M., & Spiller, M. W. (2016). Women’s Wage Theft: Explaining Gender
Differences in Violations of Wage and Hour Laws. Work and Occupations, 43(4), 371–400.
https://doi.org/10.1177/0730888416661019

Raghunandan, A. (2021). Financial misconduct and employee mistreatment: Evidence from