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If You're Reading This, You are a Victim of Wage Theft

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When non-union management steals from their workers, they are literally stealing from all of us, because cost burdens normally borne by employers are thrust on the public to maintain.

Ten years ago the Economic Policy Institute said that American workers lose more than $50 billion every year to wage theft. Those workers are deprived of much more than their rightful pay – as you’ll find out further into this piece. And America is likewise deprived of massive benefits that we should be enjoying as a country but are denied because unscrupulous managers know they can get away with stealing from us all.

Wage thieves have their hands in your pocket, whether you know it or not.

How Wage Theft Hurts the Vulnerable

Wage theft happens when management withholds from its workers elements of compensation that are part of the employment agreement. Things like overtime, health benefits, pay rate, number of hours worked: these are the areas targeted by wage thieves to steal from their workers.

It’s a practice that is rampant in New York’s construction industry, where about 70% of the work force is not unionized, and a large portion of those workers are undocumented. These two qualities make these people especially vulnerable to powerful and unprincipled bosses.

Misclassification of workers is perhaps the most common ploy used by cheating managers. They will identify a laborer as a contracted worker rather than as an employee who would be entitled to benefits like unemployment insurance, a health benefits plan, social security subsidization, and paid sick leave. But contracted workers must carry the costs of all these normal work benefits.

All-Too Common Examples of Wage Theft

Union Built Matters spoke with Ivan Duta, now a member of metal latherers local 46, who told us of his years working for Parkside Construction, a notorious non-union builder. He said. “I contributed money from every paycheck into a health benefits program they [Parkside] said they had enrolled me in. But when I went to use that benefit, the doctor I visited told me I had no healthcare. I called the benefits company and they told me the same, ‘No Ivan Duta in our records.’"

Further, his paycheck rarely reflected all the hours he’d submitted for a pay period. He complained to his supervisors but got nowhere. “I was powerless, really,” he said. “The only thing I could really do was quit.”

Eddie Perez, now a member of the New York carpenters union, told us about his time at Mountco and Mega, two more bad players in the non-union construction racket. “Come pay day they’d say stuff like, ‘Well, you really only worked four hours as a carpenter. The rest of that day you were moving materials. That’s laborer time. You’ll get four hours at carpenter pay and four at laborer.’ That’s complete BS.”

Wage theft is rampant in New York’s construction industry, where about 70% of the work force is not unionized, and a large portion of those workers are undocumented.

How Wage Theft Hurts Unions

Put simply, wage theft allows non-union contractors to offer lower bids, and they’re winning more projects as a result.

Unions have agreements with members about pay rate, benefits, pensions, and more. They honor their commitments and the workers benefit — so do the projects they work on, which get a dedicated, highly professional crew. But when dishonest contractors know they can steal wages from their workers, they represent those “savings” in their project estimates. This is a significant way that non-union builders are able to provide lower project bids than union contractors on new construction.

In reality, however, several recent studies have shown that for a number of reasons when developers hire non-union for a project, that job ends up costing more than it would have had they hired union.

How Wage Theft Hurts America

By misclassifying workers, bad acting contractors deprive the US of tax revenues. By denying sick pay and health benefits from their workers, bad actors push those costs onto the American taxpayer who funds the clinics and hospitals that must tend to the workers when they inevitably need care. By withholding proper pay from their crews, bad actors put a further burden on America’s social safety net when the underpaid people must turn to public services for help to survive.

The EPI says the size of the problem is over $50 billion annually (in 2014 dollars). But that’s just the financial impact. Ivan Duta, the ironworker union man who was once the perpetual victim of wage theft by his non-union bosses, said, “It [wage theft] just defeats you. You think you have honest work to help yourself and your family. And then they take everything away you thought you had. Your benefits. Your pay. And there’s really nothing you can do. It crushes you.”

Mr. Duta said he lived in a community where a large portion of his neighbors also work in construction, and the vast majority of them work for non-union contractors. “I’m in a union now, but I remember how it was working for Parkside. I talk with these guys and it’s still the same over there [on the non-union side]. It’s like an entire community under the boot of bad bosses and they don’t know how to get out.” He continued, “I tell them to either try to get into a union or to organize. I think that’s the only way.”

It’s time we got serious about wage theft. We need bullet proof laws that level the playing field and punish offenders.

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