In honor of Labor Day, Total Bankruptcy is looking at some interesting (and frightening) labor statistics.

A study released last week shows a troubling trend in minimum-wage employment: failure to comply with many laws governing workers’ rights.

The Wage Study

Funded by grants from the Joyce, Hanes, Russell Sage and Ford Foundations, the study examined 4,387 low-wage workers in Los Angeles, Chicago and New York, the nation’s three largest cities. Included in the research were workers often excluded from such studies, including those paid in cash and undocumented immigrants.

Survey subjects represent a group that, according to the study, makes up 15% of the workforce in the three cities involved.

The Findings: A Variety of Violations

The study exposed violations of a variety of workplace laws, including these:

• Minimum wage violations: 26% of subjects were paid less than the federal minimum wage; 60% of those were shorted by more than one dollar per hour. With minimum wage at $7.25, one dollar is nearly 14 percent of an earner's income.
• Overtime violations: More than 25% of respondents worked more than 40 hours in a week. Of these, 76% were not compensated according to overtime payment laws. On average, workers clocked 11 hours of overtime and were either underpaid or not compensated at all.
• Off-the-clock violations: Almost a quarter of interviewees arrived early or stayed late for a shift; 70% of these received no compensation for those hours.
• Meal break violations: 86% of respondents worked long enough to qualify for meal breaks, but more than two-thirds (69%) had no break, a shortened break, were interrupted during their break or worked during their break.
• Pay stub and illegal deduction violations: Though documentation of earnings and deductions is required in all three states, 57 percent of those interviewed received no such documentation. Further, 41 percent noted that their employers had cut their pay for illegal deductions.
• Tipped job violations: Respondents in tipped wage fields, where the minimum wage is lower, reported not receiving even the tipped-worker minimum wage. And 12% reported that bosses or supervisors stole a portion of their tips.
• Retaliation violations: Twenty percent of those interviewed reported employer retaliation (in the form of suspension, firing, threatening or similar) when they attempted to form a union or lodge complaints. Another twenty percent noted that they opted not to speak up for fear of retaliation.

In addition to these, other violations were recorded. And, according to the study, the findings may be more accurate than traditional government-based studies because the respondents included 39% illegal immigrants, 31% legal immigrants and 30% natural-born Americans.

Bankruptcy and Wage

Statistics show that the average bankruptcy filer earns less than $30,000 a year, a group that certainly includes those working for minimum wage. Pay violations are not only illegal, but they make it difficult for workers to pay bills and debts, leading many to file bankruptcy.

Minimum wage earners who don't have health insurance, for example, may be forced to file Chapter 7 bankruptcy to discharge medical debt.

Additional Resources

Broken Laws, Unprotected Workers (PDF)