Wage theft and surplus value: Capitalist greed is unaffordable

I’ve never really watched TV news, but I’ve been given to understand that a great deal of attention is paid to crime. Combine this with the ubiquity of “copaganda” in media, and I can understand how people might be misled into thinking that violent crime is out of control. The reality is that all that focus on criminals, and the paranoia about home invaders and muggers – it all seems to be a distraction from the biggest form of theft in the United States: Wage theft.

For those who are unclear on the concept, this is not another way to refer to the portion of wealth created by a worker that is kept by the boss as “profit”. We’ll get to that later. “Wage theft” is when an employer fails to pay workers what they are owed by law. This happens in a variety of ways. My last landlord in the U.S. would delay payment to his workers, and then underpay them when he did pay, forcing them to fight to get even the pittance that he was legally required to give for the work they were doing. This man, to remind you, owns dozens of homes in Somerville. Zooming out, the bulk of wage theft seems to be from paying less than minimum wage, followed by overtime violations, but all together, it adds up to a truly staggering amount of money, mostly stolen from poor people, by rich people.

Wage theft is a nationwide epidemic that costs American workers as much as $50 billion a year, a new Economic Policy Institute report finds. In An Epidemic of Wage Theft Is Costing Workers Hundreds of Millions of Dollars a Year, EPI Vice President Ross Eisenbrey and EPI intern Brady Meixell examine incidences of wage theft—employers’ failure to pay workers money they are legally entitled to—across the country. The total amount of money recovered for the victims of wage theft who retained private lawyers or complained to federal or state agencies was at least $933 million in 2012, almost three times greater than all the money stolen in robberies that year. However, since most victims never report wage theft and never sue, the real cost of wage theft to workers is much greater, and could be closer to $50 billion a year.

“Wage theft affects far more people than more well-known crimes such as bank robberies, convenience store robberies, street and highway robberies, and gas station robberies combined, and can be absolutely devastating for workers living from paycheck to paycheck,” said Eisenbrey. “For low-wage workers, the wages lost from wage theft can total nearly 10 percent of their annual earnings.”

The authors also conducted a study of workers in low-wage industries in New York, Chicago, and Los Angeles and found that in any given week, two-thirds experienced at least one pay-related violation.  They estimate that the average loss per worker over the course of a year was $2,634, out of total earnings of $17,616. The total annual wage theft from front-line workers in low-wage industries in the three cities approached $3 billion. If these findings are generalizable to the rest of the U.S. low-wage workforce of 30 million, wage theft is costing workers more than $50 billion a year.

The image is a block chart breaking down the scale of wage theft vs. other forms of theft. The large blue block on the left represents wage theft, broken up into minimum wage violations ($23.2 billion), overtime violations ($8.8 b), rest break violations ($4b), and off the clock violations ($3.2b). The smaller block of "other types of theft" is broken up between larceny at $5.3b, burglary ($4.3b), auto theft ($3.8b), and robbery ($0.34b). The image is from tworkerscenter.org

The image is a block chart breaking down the scale of wage theft vs. other forms of theft. The large blue block on the left represents wage theft, broken up into minimum wage violations ($23.2 billion), overtime violations ($8.8 b), rest break violations ($4b), and off the clock violations ($3.2b). The smaller block of “other types of theft” is broken up between larceny at $5.3b, burglary ($4.3b), auto theft ($3.8b), and robbery ($0.34b). The image is from tworkerscenter.org

This is one part of why the gap between rich and poor keeps growing, and why life is such a struggle for those at the bottom. Even minimum wage is too much for these people. I often talk about the endless greed of the capitalist class, and this is exactly what I mean – they earnestly seem to believe that everything belongs to them by right, and therefor they are justified in doing whatever they can get away with to hoard more. It doesn’t matter that they signed a contract, they don’t even want to pay enough to keep their workers alive.

The problem is that even this is just a part of the whole picture. To start with, it’s not really treated like a crime. There may be fines or prison if theft can be proven to be intentional and the legal team isn’t good, but if the employer maintains that it was just incompetence, or a mistake, or an error in a new system, generally the worst-case scenario for the boss is that they have to hand over what they stole. Minor theft by poor people will result in years in the violent hellscape of the U.S. prison system, but when rich people steal billions, they can be confident that they’re safe.

And let’s not forget that with so many USians living paycheck to paycheck, even if they get back the money, they might have had to take out a payday loan, or been unable to afford medicine, or food. They might have gotten evicted because they couldn’t afford rent, even though they’d held up their end of the contract.

But it seems that all this barely-illegal theft, and all the harm caused by it, is itself dwarfed by the amount of money that has been, quite legally, taken from the USian working class, even as those workers have been increasing their productivity year after year. See, it turns out that we can, in some ways, measure wage stagnation in terms of Wall Street bonuses:

The federal minimum wage in the United States would be more than $42 an hour today if it rose at the same rate as the average Wall Street bonus over the past four decades, according to an analysis released Thursday by the Institute for Policy Studies.

Citing newly released data from the New York State Comptroller, IPS noted that the average Wall Street bonus has increased by 1,165% since 1985, not adjusted for inflation.

Last year, the average cash bonus paid to Wall Street employees was $176,700—75% higher than in 2008 but slightly lower than the 2021 level of $240,400.

The federal minimum wage, meanwhile, has been completely stagnant since 2009, when it was bumped up to $7.25 from $5.15. While many states and localities have approved substantial pay increases in recent years, 20 states have kept their hourly wage floors at the federal minimum.

Sarah Anderson, director of the Global Economy Project at IPS and the author of the new analysis, wrote Thursday that “average weekly earnings for all U.S. private sector workers increased by only 54.4%” between 2008 and 2022—a significantly slower pace than inequality-fueling Wall Street bonuses.

“The total bonus pool for 190,800 New York City-based Wall Street employees in 2022 was $33.7 billion—enough to pay for 771,520 jobs that pay $15 per hour with benefits for a year,” Anderson observed. “Wall Street bonuses come on top of base salaries, which averaged $516,560 for New York securities industry employees in 2021.”

There’s a popular misconception that rich people don’t do any work to actually earn their wealth. In reality, they buy influence, create labyrinths of bureaucracy, and put a great deal of effort into taking as much as they possibly can from everyone who is poorer than them. This is the system working as designed. This is the world capitalism provides – one in which those at the bottom are ground down relentlessly, to the point where they’re selling parts of themselves to survive, while those at the top invest obscene amounts of money in military and police to crush the uprisings that such a system will inevitably provoke.

And, lest you forgot about climate change for a blissful moment, those same tools of control are used to put down any other efforts at radical change. They won’t pay you, but they’ll happily chip in to train and pay thugs to beat you down for complaining too loudly. Stories like this are why this “climate change blog” is so often about social and political stuff that’s not directly related. Some of it’s that I feel a duty to talk about things, like the ongoing genocidal attack on trans people, but a lot of it is that all of these things are connected. Money isn’t all they’re stealing. They’re stealing our health, by pouring poison into the world. They’re stealing our time, by ensuring that we have to work most of our lives away. They’re stealing our future, by working to prevent climate action. They’re doing all of that, and they make sure that no matter how many billions of lives they may destroy, it’s all legal.

No system of law that allows this can be considered legitimate.

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