Stiffing Workers on Wages Grows Worse With Recession

In a survey of about 250 restaurant workers by One Fair Wage, a group that seeks to require employers to pay all workers the full minimum wage, more than half who responded definitively said they had taken home less than the minimum wage even after tips at some point. A large majority said their tips were down at least 50 percent during the pandemic, suggesting that many are now falling well below the regular minimum wage. The survey was taken in Massachusetts, New York, Illinois and Washington, D.C.

“This violation of the law — tips not bringing workers to the full minimum wage — is happening much more regularly,” Saru Jayaraman, the group’s president, said in an email. Ms. Jayaraman’s group organized a strike by tipped workers in New York and Chicago on Monday to demand that employers pay the regular minimum wage before tips. She said pressure from workers in recent months appeared to have already changed behavior among some employers.

Kymani Hill, a worker in Chicago, said he recently quit a restaurant job that sometimes paid him $8 or $10 for a night of work. “It was better before Covid,” said Mr. Hill, who helped lead the Chicago strike. “As soon as Covid hit, stuff got bad. Not much money was coming in.”

According to Ms. Fine and her colleagues, violations persist in part because of the way regulators approach enforcement. The researchers note that most cities and states largely rely on workers to file complaints to generate investigations rather than inspecting workplaces without prompting.

The problem, the authors argue, is that the workers most vulnerable to exploitation are often the least likely to speak up — both because they tend to be less aware of their rights and because they fear retaliation — so regulators end up devoting more resources to more compliant industries. And recessions tend to compound that pattern as workers become even more fearful of complaining.

One alternative that the authors recommend is known as strategic enforcement, in which regulators focus on influential employers in industries that are rife with lawbreaking, and act aggressively when they find violations.

“There’s kind of this assumption when you have high unemployment in an economy like this that you have to support small business, have to ease up on enforcement,” Ms. Fine said. “Our view is that is a really, really bad idea. When you do that, you can end up permanently damaging wage standards. It’s exactly the time you have to make sure wage standards are respected.”