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Caroline Fan on October 31, 2008 - 5:30pm
Whatever the penalties and the law, one key to enforcement is making sure agencies are well-funded and creatively coordinate their work for maximum effectiveness. Instead of promoting a narrow tactic like sanctions against employers of undocumented workers, which only drives the problem of low-wage employment underground, New York State has created a new Bureau of Immigrant Workers' Rights. This new agency has already moved forward in cracking down on low-wage law violators - sending a van out to churches and community groups to encourage immigrant workers to come forward to report wage law violations - teaching an important lesson that outreach, not pushing immigrants into the shadows, is the key to raising wage standards for all.
One reason for this trend towards wage enforcement is that state governments lose billions of dollars in revenue each year due to the failure to enforce state wage laws. Instead of wasting state money on costly, wasteful local enforcement of immigration laws, stepped up wage law enforcement will more than pay for itself. For example, a February 2007 report by Cornell University researchers estimated that 704,000 of the seven million private-sector workers in New York state were misclassified as independent contractors, costing the state $175 million in unemployment insurance taxes each year and undermining those workers' rights. Another study by New York's Fiscal Policy Institute estimated that off-the-book wage payment violations the state was losing $26 million in unpaid income taxes in the construction industry alone.
- A California Joint Enforcement Strike Force on the Underground Economy was created over a decade ago; a 2006 state labor department report found that in one year, various agencies investigating labor and pay reporting violations collected over $100 million in citations and assessments.
- In New York, a new state joint task force of state labor, tax and worker compensation agencies conducted a dramatic sweep this year of 117 employers, finding 2,078 illegally misclassified employees and another 646 workers who were owed minimum wage and overtime pay totaling $3 million. Massachusetts Gov. Deval Patrick created a similar task force earlier this month via Executive Order 499.
- Illinois, along with a number of other states, has mandated a state study commission to collect data and information on lost tax revenues due to independent contractor abuses.