January 28, 2009

Revolt on Goose Island: Kim Bobo on Wage Theft


In the latest installment of ongoing Melville House “Live Book” project, Kari Lydersen continues to investigate something that may have been at the heart of the revolt on Goose Island — wage theft ….

Kim Bobo at a rally for striking Republic Windows & Doors workers.

Kim Bobo at a rally for striking Republic Windows & Doors workers. (Photo by Kari Lydersen)

Every day across America, thousands of people are falling victim to a hidden crime that ruins the health of workers, strains the bonds of families and saps the economic and social vitality of communities. That is wage theft, which long-time labor organizer and interfaith leader Kim Bobo calls in a new book “the crime wave no one ever talks about.” Each year billions of dollars worth of wage theft occurs, topping any other category of larceny. A business-oriented think tank, the Economic Policy Foundation, pegs the number at $19 billion annually.

The victims are cooks and farm workers paid below minimum wage for grueling work. Day laborers picked up on street corners for temporary construction or rehabbing jobs, only to be paid less than they were promised or sometimes not paid at all, and often abandoned in a strange location to boot. Factory workers injured on the job but denied workers compensation or medical coverage. Poultry workers not paid for the cumulatively long hours they spend “donning and doffing” safety gear. Workers intentionally misclassified so they don’t get overtime pay or benefits. And it’s not just blue collar workers – financial adjustors, nurses, writers and other white collar employees are often victims of wage theft, in many cases due to wrongful classification as independent contractors.

Bobo notes surveys have found that 60 percent of nursing homes have stolen workers’ wages; as did more than half of cucumber, garlic and onion producers; 78 percent of restaurants in New Orleans and 100 percent of poultry operations. In all, about three million people nationwide actually earn below the minimum wage, and millions more are misclassified and not paid overtime due them.

The Republic Windows workers became victims of wage theft when they were not paid the severance pay and provided the post-layoff health insurance due them along with not being paid for a week of actual work.

Wage theft may long have been the “crime wave that no one talks about.” But that appears to be changing, judging by the turnout for Bobo’s reading at the Harold Washington Library in downtown Chicago on a frigid Monday night. Sixty people packed the room and at least 20 more were turned away because of fire occupancy codes. Teenagers and other library patrons who hadn’t heard about the event did double takes when they saw Bobo’s books on a table –- the title apparently resonating with them.

The business community is well aware of their liability when called to task for wage theft -– or wage and hour violations, as classified under the Fair Labor Standards Act (FSLA) of 1938 -– intentionally or unintentionally committed by employers. But while employers may be forced to pay overdue wages through private lawsuits and Department of Labor actions, they are rarely criminally punished for the theft, even though stealing an equivalent amount of cash, jewelry or cars would certainly get one locked up. Bobo advocates criminal prosecution of blatant wage thieves, to send a message that such behavior is not acceptable.

I talked with Kim about wage theft and its larger significance.
Kari Lydersen: Do you think many people are unaware that wage theft is a common problem that may become more widespread in the current economic climate? And do you think many people who suffer wage theft don’t realize they are not isolated victims, but part of a systematic problem?
Kim Bobo: The most common response to the book is: “I had no idea it was such a problem.” Most people are shocked to learn how widespread the problem is. When wage theft is defined and illustrated, most people know someone who has been a victim, but the wage theft was seen as an isolated problem, not a systemic one.

What are the ripple effects of wage theft in families and communities?

Wage theft steals from workers, which means working families earn hundreds and often thousands, or sometimes tens of thousands, of dollars less per year than they should have. This means the workers can’t afford food, health care, clothes, after-school opportunities or a down payment on a house. Stealing wages from workers hurts families. Each dollar that is stolen from a worker is also stolen from low- and moderate-income families. Economists are clear that the most effective way to get money used and spent is to give it to low- and moderate-income families. Few will hoard it away. Instead, the money is circulated in the communities, which is precisely the kind of economic stimulus the nation needs.

Your book talks about how the Department of Labor deals with wage theft and the limits on its powers and effectiveness as it is currently structured. You also chronicle community, worker center and union actions against wage theft. In general, what do you think are the most important forces or strategies in combating wage theft?

The answer to this question is almost half the book…The key forces for challenging wage theft are unions (which currently represent fewer than 10 percent of workers), ethical businesses (which have been largely silent on this issue), workers centers (which are doing fabulous work on a shoestring), private attorneys (who have been carrying the bulk of the push back work in recent years) and the state and federal departments of labor.

Do you consider the Republic Windows situation a clear-cut case of wage theft? How typical is it or how would you put it in context with situations you described in the book?

Republic Windows clearly demonstrates wage theft. The federal WARN Act is very clear. Good-sized companies, like Republic Windows, must give workers 60 days notice before closing down. If they don’t give them that kind of notice, they must pay the workers for 60 days. Republic Windows gave the workers three days notice and did not want to pay them for the 60 days.

You talk about how in some cases wage theft is committed unintentionally by small employers who aren’t aware of how labor law affects them; and in other cases it is perpetrated indirectly through higher-ups putting pressure on managers of different stores or sites to keep costs low (ie Wal-Mart); and in some cases it is blatantly intentional (ie people picking up day laborers and later refusing to pay them). Can you speculate on where Republic Windows fits into this continuum?

Although I cannot claim to see inside employers’ hearts, given that at the same time Republic Windows was contemplating shutting down in Chicago, it was opening a similar plant in Iowa, it certainly appears that this company was simply trying to shirk both its legal and moral responsibilities.

Do you expect the wage theft situation to improve significantly under the Obama administration, and if so how? What role can public pressure play?

On the one hand, I suspect that more workers may get cheated of wages when their plants shut down or they get laid off. On the other hand, I am confident that Labor nominee Hilda Solis will strengthen the Department of Labor’s wage enforcement capacity and strategies. There are many ways all of us can help stop and deter wage theft. Get the book and learn how!

Read more about Kim Bobo’s book, Wage Theft in America, here. And read more about Interfaith Worker Justice – one of the key players marshalling support for the Republic Windows workers — here.