Wage Theft Is an Epidemic. Here’s How We Can Help Fix It.

Although Javier*, who immigrated from Mexico with his family, routinely worked 50 to 60 hour weeks for four years in a Philadelphia restaurant’s kitchen, he was never paid properly. When Javier demanded all the unpaid wages and overtime that had accrued, his employer threatened him with immigration consequences and physical violence against him and his family. The employer also called Javier at home repeatedly to threaten him when he learned that Javier had contacted a lawyer at Community Legal Services of Philadelphia, a civil legal aid provider. Fearing that the abusive employer would act on his threats, Javier and his family spent days without leaving their home.

Javier’s experience isn’t uncommon. Our civil legal aid attorneys have also represented a crew of cleaners who were locked in a restaurant overnight while they cleaned (and not paid overtime for the additional hours) and construction workers strung along for years with partial weekly payments, among others. We have even had to sue the same employers multiple times on behalf of different workers. And the practice is widespread. A report from Temple University’s Sheller Center found that in any given work week in the Philadelphia area, almost 130,000 workers will be paid less than minimum wage, over 100,000 will experience an overtime violation, and over 80,000 will be forced to work off-the-clock without pay.

Although wage theft is illegal under federal law and under statutes in most states, enforcement is underfunded—sometimes nonexistent. This disproportionately impacts low-wage workers, who are more likely to work in low-regulation and non-union jobs where employers cut corners at their expense. But these workers—who need those wages the most—don’t know where to turn for help when they do not receive a paycheck, fear losing their job if they complain, or simply cannot afford to miss work for the several days that it takes to file a complaint and attend a court hearing. And for immigrant workers like Javier, they are often threatened based on their immigration status when they complain to their boss.

Enforcement of wage left laws is underfunded—sometimes nonexistent.

And between the small number of workers willing to complain and low financial penalties, deterrents to wage theft are inadequate to curb the practice. In Pennsylvania, for example, the Wage Payment and Collection Law only mandates a penalty of 25 percent of wages due on top of repaying the wages. Thus, if an employer doesn’t pay six workers and only four come forward with formal complaints in court, the employer comes out ahead—he pays less in fines than he would have had he paid his six workers correctly.

Unfortunately, bills that would help address these issues have languished in the legislature for more than a year despite the support of the vast majority of voters. In the absence of legislative action, we have found that local ordinances are a powerful locus of action, even though they impact fewer workers.

As the workshops of democracy, cities and municipalities also allow us to test new models on a limited scale and to identify what should be replicated on a wider scale. This was a tried and true strategy in the context of paid sick days: after an organized and effective campaign over the last few years, activists managed to pass a paid sick leave ordinance in Philadelphia last year. Similar ordinances have come out of San Francisco, Seattle, New York, and Los Angeles, among other cities.

We therefore partnered with labor and community activists to pass a local anti-wage theft ordinance that fit well within the powers of a municipal government. The legislation included three main facets, each of which was integral to the legislation.

First, an administrative enforcement mechanism allows workers to bring complaints against their employers without having to miss work and therefore pay. Making the complaint process easy and the hearing free  is a critical way to expand remedies by making them practically available to more people. Although the federal Department of Labor already offers this kind of service, it does not do so for workers who work at businesses that have less than $500,000 in annual revenue. Some states offer a similar complaint process, but their efficacy varies.

Second, the legislation requires that penalties be raised. The current penalties in Pennsylvania are shamefully low, making wage theft an economically good decision for the unscrupulous employer. By raising penalties, the ordinance should increase compliance by making wage theft a bad economic decision.

Third, the legislation allows the city to go after business licenses, further demonstrating to employers that wage theft is a poor business decision. By allowing the city to revoke or suspend a business license, we can root out the worst actors and prevent them from causing further harm (or cajole them into compliance).

With these principles in mind, we partnered with Councilman Bill Greenlee, who had led and won the seven year fight for paid sick leave, and introduced a strong bill in City Council. Boosted by press coverage of the widespread local wage theft problem, we built a broader network of community leaders and advocates, created supporting materials, wrote legal memos, met with editorial boards, and lined up workers to tell their stories. The bill passed City Council in October and was signed by Philadelphia Mayor Michael Nutter in December. The ordinance will go into effect in July 2016 and will be implemented by our new Mayor, Jim Kenney.

Despite all appearances, legislative change that benefits working families is possible, even when state politics makes it seem impossible. In order to achieve pro-working family change, activists need to alter their frame by working at the local level, rather than deal with the gridlock and lack of action at the federal level and state levels.

After all, as former U.S. Speaker of the House Tip O’Neill famously said, “All politics is local.”

*Name has been changed.


First Person

I Grew Up in Flint. Here’s Why Governor Snyder Must Resign. 

Growing up in a slew of apartment complexes and trailer parks in and around Flint, Michigan, I developed a peculiar habit.

I would stand on the linoleum floor of our kitchen with the telephone pressed against my face, counting. I was counting how long it took my friends to answer the phone—it never took more than four seconds for us to answer in our trailer. Knowing how badly I wanted to live in a house like my friend Dan’s, who took an entire 25 seconds to answer the phone, my mother would look me in the eye and tell me, “We’ll get there some day.” She taught me that hard work would lead me to those opportunities. After all, this was America. I believed her.

But now, if you’re a poor kid growing up in Flint today, forget economic mobility—you don’t even deserve clean water.

Flint’s water crisis has catapulted my hometown into the national spotlight in recent days, leading President Obama to declare a State of Emergency on January 16. The following week, the New York Times editorial board rebuked Michigan Governor Rick Snyder for a “callous indifference to the plight of mostly black, poverty-stricken residents of Flint.”

That the water supply of a sizable American city is poisoned with lead makes for a shocking story. But this crisis is no accident. Rather, it is the result of decades of systemic disinvestment in poor black cities.

It wasn’t always like this. For my family, Flint embodied the American Dream. Lured by one of the nation’s highest per capita incomes in the 1950s, they had traveled to Flint from Texas in search of auto jobs with union wages—and a shot at a better life for future generations.

For my generation, the hopeful narratives that our parents spun us clashed all too harshly with the realities we saw around us. Decades of government neglect and an exodus of manufacturing jobs put an end to Flint’s solidly middle class status. Currently, 42 percent of the city’s residents live below the poverty line.

This crisis is the result of decades of systemic disinvestment in poor black cities.

Flint isn’t the only city in Michigan experiencing this decline. In fact, Flint was one of six cities— most of which were poor and had a majority black population—to be placed under emergency management by Governor Snyder since 2011. The emergency manager law gave unchecked power to the governor in the name of helping these communities emerge from financial distress. But in reality, it unleashed a series of devastating austerity and privatization measures adopted in the name of progress, and took away democratic rights from poor communities of color.

In Muskegon Heights, an emergency manager dissolved the public school system and turned it over to a for-profit charter school, only to have the company bail on the contract because, as the emergency manager put it, “the profit just simply wasn’t there.” In Pontiac, emergency managers privatized or sold nearly all public services, outsourcing the city’s wastewater treatment to United Water months after the company was indicted on 26 counts of violating the Clean Water Act, including tampering with E. coli monitoring methods to cut corners on costs.

In Flint, children were poisoned to save money.

The people affected by these decisions had no recourse to hold decision makers accountable. In Michigan, the idea of a government of, by, and for the people did not apply to poor black cities, and when residents were robbed of the ability to govern themselves, they suffered. In Flint, it meant they got poisoned.

This is not the America that brought my family to Flint in pursuit of opportunity. In fact, my relatives were among the hundreds of protesters at the State Capitol fighting for our hometown during the State of the State address. We’ve had enough. It’s time for Governor Snyder to resign.

If we are a society that believes everyone deserves a fighting chance, we need to be vigilant against undemocratic policies that punish communities for being poor and black. It’s not just Flint that suffers; it’s our democracy.

The views expressed by contributors to the do not necessarily reflect the views of the Center for American Progress. The diverse content is intended to spark conversation about how to strengthen the anti-poverty movement.



No, Florida Isn’t a Model on Payday Lending

In any given year, 12 million Americans take out a payday loan, which often comes with a triple-digit annual interest rate. And, as four out of every five of these borrowers aren’t able to afford these usurious rates, millions end up saddled with unsustainable debt.

But like a hydra that just keeps regenerating, payday lenders often spring back when states try to rein them in. Take Ohio, for example. After 64 percent of Ohio voters—and a majority in 87 of the Buckeye State’s 88 counties—voted to ban payday lending in 2008, lenders just rechartered themselves as mortgage lenders under state law, despite not making any home loans. And after payday loans were banned in Arizona, lenders switched over to making pricey car title loans. This struggle to regulate lenders at the state level is one of many reasons why the federal Consumer Financial Protection Bureau (CFPB) is working on a proposed rule to curb payday loan abuses.

Unfortunately, some members of Congress from Florida are defending lenders in their race to the bottom. Last year, the entire Florida Congressional delegation, with the exception of Rep. Thomas Rooney (R-FL), sent a letter to the CFPB’s Director Cordray arguing that new rules are unnecessary because Florida’s regulations are “among the most progressive and effective in the nation.” Recently, they went one step further, when twelve Floridians in Congress—seven Republicans and five Democrats—sponsored the so-called Consumer Protection and Choice Act. This bill would block CFPB’s actions for two years.  It would also exempt states from having to adhere to the new CFPB rule if they model their own laws on the Florida regulations. Ten other members co-sponsored the bill, including two Ohioans who apparently missed the results of their state’s 2008 referendum.

If Florida were indeed a model state on regulating abusive lending practices, this legislation might make sense. New York, for example, has a 25 percent interest rate cap, and state officials have also aggressively pursued lenders that try to skirt the law by making illegal loans over the Internet. Indeed, 14 states and the District of Columbia have similar rate caps that protect consumers from dangerous loans. The Pentagon is also a model: under the Military Lending Act, loans to servicemembers and their families are capped at 36 percent annually. But Florida’s annual interest rates average 360 percent, and payday lending drains an estimated $76 million a year from the state’s economy. That’s hardly “progressive and effective,” nor is it a model we should aspire to replicate nationwide.

Indeed, the Florida regulations that some in Congress want other states to follow, such as a 24-hour cooling-off period prior to taking out another loan, by and large don’t work. 85 percent of Florida borrowers take out seven or more loans a year, and almost two-thirds take out at least a dozen loans. That suggests a product that makes financial distress worse, not better. In the words of one Florida borrower from Daytona Beach, “I would take out a payday loan for emergencies and it would take me an entire year to pay it back. I would have to juggle all my other bills, causing more problems than I had in the beginning.”

While the CFPB’s proposed rule is yet to be announced, it will undoubtedly go farther than states like Florida in stopping these kinds of debt traps. It should require lenders to determine whether the borrower is actually able to pay back the loan—a common-sense approach that can stop financial problems from cascading down the line. And it should ban a lending practice that amounts to legalized pickpocketing: repeated automatic withdrawals from a borrower’s bank account as soon as funds are available, even if the borrower has more important bills to pay. These actions would make it harder to exploit vulnerable borrowers and also complement states’ authority to cap interest rates.

Americans want something done about the payday lenders that are taking money out of the community and causing great financial distress. In fact, every time the issue has gone to the polls—in Ohio and Arizona in 2008, and Montana in 2010—responsible credit has won. It’s time for members of Congress to listen to the will of the people and make it harder for their vulnerable constituents to get ripped off.


First Person

I’m an Ordained Minister and I Support Abortion Access

Tomorrow marks the forty-third anniversary of Roe v. Wade, the Supreme Court decision that made safe and legal abortion available to people across the country. As we write speeches glorifying this milestone in our collective history, we must remember and honor the advocates that made it possible for women and families to decide when to have children. We also must reflect very deeply about the future of that right and about the people who are already denied its benefits. This is especially true for those of us who are people of faith.

Since Roe over four decades ago, the Religious Right has used the emotional juggernaut that is their rhetorical reach to shift the focus away from the health, security, and freedom of women and families. Instead, they propagate a narrow and misguided morality that seeks to control women’s bodies without concern for the needs in their lives and to embed a shaming narrative about abortion into the national psyche. Anti-abortion activists have employed these twin strategies—limiting access and shaming women—relentlessly for over 40 years. Unfortunately, in many ways they have been successful.

The first and likely most corrosive victory of that strategy is the Hyde Amendment, passed in 1976, three years after Roe. Hyde, which was framed as a compromise bill that stopped short of a full ban on abortion access, restricted the use of public funds for abortion. However, author of this amendment Representative Henry Hyde, was very clear about his motives around the compromise:

“I would certainly like to prevent, if I could legally, anybody having an abortion, a rich woman, a middle class woman, or a poor woman. Unfortunately, the only vehicle available is the [Medicaid] bill.”

Unable to make abortion illegal for all women, Hyde settled for a targeted assault on the options available to poor women. This attack set the stage for the ongoing strategy that Hyde’s acolytes have used ever since. Instead of directly contesting the legality of the issue, anti-abortion activist-legislators have tried to restrict access, availability, and affordability to ensure that abortion is legal only in theory for millions of women.

In many states, the anti-abortion movement has successfully constructed roadblocks to access, such as requiring women to have an ultrasound and look at the image before having abortion or mandating that they attend counseling services. Other legislators have sought to shame minors seeking abortions by limiting or erasing their rights to privacy. Still other anti-abortion legislators have pursued targeted regulation of abortion providers (otherwise known as “TRAP” laws) in the hopes of enacting regulations so burdensome that providers will be forced to close. These efforts to limit access to safe abortion services have been enormously successful.

The clock has turned back in a most vicious way.

On the forty-second Roe anniversary, a commentator said, “we no longer have the health crisis of women dying in ‘back alleys.’” Just one year later, that statement is not completely true, particularly for people of color and poor people, like a rural Tennessee woman who has been charged with attempted murder after trying to abort a fetus with a coat hanger. And in other states, women are making unsuccessful abortion attempts of the sort Roe supporters had hoped to eradicate. The clock has turned back in a most vicious way.

And, as some faith voices have supported each of these attacks, some people have been given the impression that all people of faith are against comprehensive health care that includes abortion services. But, what is often obscured is that, before Roe, faith leaders who understood the necessity of family planning in the battle against poverty were in the trenches helping women access safe abortions before legal abortion was available. Because of the desire for human flourishing—present in every faith tradition—progressive faith leaders are still driven to ensure women can access the care they need as opposed to shaming them for their health care decisions. Despite amplified voices suggesting the contrary, many people of faith still broadly understand full-spectrum women’s health care as a primary tool for the building of healthy communities. And, reproductive justice advocates understand a woman’s faith as inseparable from the rest of her lived experiences and attend to spiritual health as seriously as they do all other identified needs.

We will only be able to truly celebrate Roe when all women have access to abortion services without the stigma and judgment of others. For these reasons, as we pause to reflect on this forty-third anniversary of Roe v. Wade, progressive people of faith must raise our voices in support of the women in our faith communities. The time for staying publicly silent has long passed. Instead, if we care about women of color, low-income women, and families whose fates are too often at the mercy of anti-abortion politicians, we must be bold in our challenge to faith narratives that shame and blame. We must fill the public sphere with language of love and kindness rather than judgment and ire. We must stand up for women of faith because seven in ten women who seek abortions report a religious affiliation. Some of them will look to us for guidance. We owe them our support, our love and our voices in protection of their lives. We must not fail them!



How the Department of Labor Could Help Fix the Retirement Crisis

Half of working-age Americans aren’t confident that they will have enough money to retire—and they have reason to worry, given that the typical American has only $3,000 in savings. Unsurprisingly, low-income workers are even less likely to have money set aside for retirement.

The picture is even more sobering for seniors and people of color. People of color account for 41 percent of the 55 million people without retirement accounts. On top of that, they are more likely to live in poverty as both working-age adults and seniors. Without money to draw on from their retirement (African-American and Latino  families have, on average, zero in liquid retirement savings), they are far more susceptible to the ills of senior poverty, which can include everything from multiple chronic conditions to heightened mortality rates and food insecurity.

Fortunately, there is some good news on the retirement security front. The Department of Labor recently released a set of proposed rules that, if adopted, would make it possible to help millions of low-wage workers build up a retirement nest egg. These rules pave the way for states to adopt retirement programs that automatically enroll all workers into individual retirement accounts (IRAs).

People of color account for 41 percent of the 55 million people without retirement accounts.

How will automatic retirement savings help? Well, one big reason low-wage workers have lower savings is that their employers are less likely to offer any sort of retirement plan. Indeed, workplace access to retirement plans has declined by almost 20 percent since the turn of the century as employers have sought new ways to cut costs. At the same time, evidence routinely shows that when plans are offered, many workers take advantage of them—particularly when employers automatically enroll their workers. Studies indicate that participation rates can reach 90 percent with automatic programs, creating a huge vehicle for protecting and growing workers’ savings.

Inspired by these trends, California, Oregon, and Illinois have developed state-sponsored proposals over the past few years that would establish automatic savings plans for workers in their states. However, these programs will only be effective if they pass federal muster by incorporating certain protection mechanisms—and the proposed rules allow just that.

The recent DOL action allows states to implement these important programs. As David Mitchell and Jeremy Smith of the Aspen Institute recently wrote, the new rule proposed by DOL would “give states new options for expanding coverage while at the same time reducing the burden on employers.”

This important development for retirement security deserves high praise, which is why members of the Tax Alliance for Economic Mobility submitted a letter to the DOL yesterday that strongly supports the proposed rules. The Tax Alliance, co-chaired by the Corporation for Enterprise Development (CFED) and PolicyLink, is a national coalition of advocates, researchers, and experts focused on reforming tax programs that do not work for low-income households and communities of color.

These state auto-IRA programs won’t completely fix the retirement crisis, but they will allow more low-income workers to access benefits normally reserved for the rich. Currently, the bottom 60 percent of earners are lucky to receive $200 in federal retirement tax benefits, while the top one percent receive approximately $13,000 from these same programs. But as the signers of the Tax Alliance letter wrote, the proposed rules are a “major step toward expanded retirement security options for low- and moderate-income workers.”

While low-wage workers in California, Oregon, and Illinois have reason to be optimistic, excitement should spread far beyond the handful of states that have already developed these auto-IRA programs. This action by DOL will encourage more and more states to design retirement programs that work for their citizens. And while masses of savings won’t accrue overnight, these state programs can begin to chip away at the racial wealth divide and retirement crisis facing over 100 million people living in or near poverty.