Flagstaff The beginning of 2020 was historic for workers in 47 states, cities, and counties, including Arizona and Flagstaff, as minimum wage inched upward.
Across Arizona the Minimum wage increased to $12.00 per hour from $11.00 per hour, thanks to a 2016 ballot initiative which Arizona voters approved by a margin of 58-42 percent.
Thanks to a separate 2016 ballot initiative on the local ballot in Flagstaff the minimum wage in the city of Flagstaff has increased to $13.00 per hour from $12.00. (Employers with tipped wage employees only pay $10.00 per hour to those employees.)
“We’re very excited that we’re about the reach the culmination of Prop. 206,” said Tomas Robles of Living United for Change in Arizona, the group that put the issue on the ballot which scrapped the minimum of $8.05 an hour in 2016.
He said the higher wages helped get Arizonans closer to a “living wage,” especially with rapidly rising rents. And Robles said all that was accomplished without wrecking the economy as had been predicted by initiative foes, mostly in the business community.
“The industries that folks said would die off because of this minimum wage have not only been fine but actually have increased in income, employment, demand,” he said.
That is borne out by statistics from the Arizona Commerce Authority. Since 2017, the average number of people employed by all private companies has increased by 5.7%. And employment in bars and restaurants, which include fast-food establishments, has pretty much kept pace at 5.6%.
Garrick Taylor, spokesman for the Arizona Chamber of Commerce and Industry, which opposed the 2016 measure — and then unsuccessfully sued to have it voided — does not dispute that their 2016 and 2018 predictions of wholesale reductions in employment levels in certain industries have not materialized. But he said there’s a reason for that.
“It is important to remember that we are in a strong economy, particularly in metropolitan areas, both nationally and in Arizona,” he told Capitol Media Services. “We have yet to see the effects of this policy in a struggling economy or to truly understand the impact in rural areas.”
But the Grand Canyon Institute says that doesn’t bear out. A study written in 2019 by the Grand Canyon Institute, focusing on Flagstaff and rural Coconino County, concluded that since the wage law took effect in 2017 there has been a 19% increase in food service hourly pay.
The report did conclude, however, that there was “some evidence” that the average hours worked by those in that sector of the economy “may have declined by about one hour per week.”
This means a full time worker at 40 hours earning the minimum in 2017 at the time of the study ($10 per hour) earned $400 a week but the average min wage worker (who lost that hour) at 39 hours a week actually earned $390. But if minimum wage had not risen that 40 hour per week worker earning $8.05 — the min wage current at that time — would have brought home $322. After crunching those numbers even if the worker lost an hour a week they still netted an extra $68 with the increase. Or an additional $272 a month while accounting for the lost hour. In 2020 those ratios still hold.
The minimum wage doesn’t help all employees in Arizona. Tipped workers, casual domestic employees (like babysitters) and people employed by their parents or siblings are exempt from the minimum wage, and anyone employed by the Arizona or Federal government is exempt from the minimum wage. Notably, this exempts students who work for their universities —which are classified as government institutions.
The tipped exemption is not really an exemption though because tipped workers can be paid $3 an hour less that non-tipped workers so long as their tips bring their weekly average to or above the current minimum wage. If tips do not bring the total up to the minimum the employer is required to make up that difference.
All Arizona employers must display an approved Arizona minimum wage poster in a prominent place to inform employees about the minimum wage and their worker’s rights under Arizona labor law.
For Flagstaff the $13.00 is a few cents higher than the 2019 Living Wage for Coconino County of $12.55 as calculated by the MIT Minimum Wage Calculator. However, it should be noted that the $12.55 figure is calculated for a single adult in Coconino County. Once other household members are added the minimum wage tanks compared to the living wage. (See calculator.) It is also noteworthy that the average cost of living in Flagstaff is higher than in the county.
But when cities and states take action to raise wages, they often ignore a pretty obvious problem: across most of the country, employers routinely skirt paying the minimum wage, overtime wages, or contractually promised wages, with little fear of facing consequences.
When the Broken Laws study surveyed 4,387 workers in 2008 across Los Angeles, Chicago, and New York in low-wage industries like hospitality and domestic care, they found that 44 percent had been paid less than the law required within the past year. In 2017, the Economic Policy Institute estimated that employers steal $15 billion annually from workers by paying less than the minimum wage.
Two basic facts add up to create an environment where wage thieves operate with impunity. The first is that most wage thieves will never be caught. Workers often fear retaliation for speaking up or don’t have the resources they’d need to file a complaint or bring a lawsuit. And only a handful of local or state wage theft enforcement agencies have demonstrated an effective strategy for tracking down wage thieves, explaining why in places like Houston, Texas, and Charlotte, North Carolina, a typical year might only bring a single successful wage theft prosecution.
The second is that even when wage thieves are caught, our legal system protects business owners at the expense of workers: wealthy individuals and profitable companies get ample opportunity to claim they just don’t have the money to pay workers what they’re owed. A 15-state investigation by Politico found that workers who won their wage theft lawsuits only ultimately recovered 59 percent of the money that judges or juries had agreed they’d been owed. In New York City, ten delivery workers won a $700,000 wage theft ruling against the restaurant Indus Valley — although these workers started their complaint in 2008 and won their lawsuit before a federal judge in 2014, they say they’ve collected only about 15 percent of what they’re owed.
These are both solvable problems if we’re willing to change a legal and economic system that stacks the deck against working people.
The proposition in Flagstaff that created the higher minimum wage included a requirement that the city create and fund a new Office Of Labor Standards including the staffing with a compliance officer. Funding for the office seems to be holding ground as activists successfully pressured the Mayor and council in January 2020 not to take funding from the guardian office. According to Flagstaff Needs A Raise Coalition, the group behind Flagstaff’s minimum wage, that move was a bid to find money to help fund a study designed to help the Chamber of Commerce repeal the higher minimum wage.
Catching Wage Thieves In the Act
Workers know complaining about unpaid or underpaid hours can mean risking their jobs or getting shunted into a less favorable schedule. According to a 2019 report by the National Employment Law Project, 45 states lack one or more of the provisions of an effective anti-retaliation law.
Undocumented workers are especially vulnerable to retaliation. Speaking about undocumented workers in Houston, Texas, Josef Buenker, a private employment lawyer, said, “I can’t count the number of times workers have told us that that it’s an overt threat used against them, [when bosses say] ‘I’m going to report you to ICE, what are you going to do about it?’” He added, “We regularly meet with people who want to pursue their claim, but then they go home and think about it and decide not to because they’re concerned about their immigration status.”
As long as the threat of deportation can be used against workers, wage theft will persist. Aggressive deportation policies undermine labor conditions for both immigrants and for their U.S.-born coworkers, whose bargaining power is undermined by their bosses’ ability to exploit those without papers.
The cost of going to court is another key consideration. Some workers are able to find free legal counsel from a local legal services agency, but these agencies are stretched thin, forced to choose between helping people in poverty avoid eviction, fight wrongful debt collection lawsuits, win wage theft cases, and gain protection from domestic violence. A worker making more than $15,000 per year is often totally ineligible for legal services aid.
Some legal aid organizations lack the funding to take on wage theft cases at all. In Charlotte, North Carolina, for example, there are two organizations providing civil representation to low-income workers, the Charlotte Center for Legal Advocacy and Legal Aid of North Carolina, explained Ken Schorr, Charlotte Center for Legal Advocacy’s executive director, and he noted that neither organization will represent low-income workers in court for wage theft cases.
Schorr explained, “The majority of our funding is grant-based for particular areas.” He added, “We haven’t been able to find funding to do employment law based work such as wage claims.” Our country considers legal representation in civil cases a privilege, not a right — which means many low-wage workers can’t use the court system to hold their employers accountable.
That’s why, as Tallulah Knopp, a staff attorney at Boston’s Volunteer Lawyer Project, points out, it’s so important for states to have clear “fee-shifting” statutes: in many states, when a worker wins a wage theft lawsuit, the employer will have to pay their back wages, but not necessarily their legal fees.
A strong “fee-shifting” statute, like Massachusetts’, sets a standard where, if a worker wins their case, their employer pays the legal fees, instead of the worker having to pay the lawyer out of their recovered damages. That encourages private lawyers to come to the table on behalf of workers, Knopp explains.
In a state like Texas, where filing fees are $400, and many attorneys bill at $100 per hour or more, there’s no real way to get your wages back if you’re owed just $500. That’s why Knopp and Nick Wertsch, of Texas’ Workers Defense Project, both point to fee-shifting statutes as a critical part of fighting wage theft.
But Jennifer Lee, associate professor at Temple Law School, argues that relying on workers to come forward against their bosses can’t solve wage theft by itself, even in the presence of fee-shifting.
As Lee explains, the information barriers and risks for workers to report their own wage theft remain high, even when states try to protect workers from retaliation. “The number of workers who are suffering violations versus the number of people who come forward is miniscule,” says Lee.
After investigating 141 state and local anti-wage-theft laws, she concluded that we can’t rely on workers to file complaints or lawsuits: while a worker’s “private right of action” can be part of the solution, we also need strong wage theft enforcement agencies that don’t just react to workers’ complaints, but are on the lookout for abuse.
Funding is part of the problem in some cities and states, says Lee, but she also points to cities whose enforcement agencies are dramatically underutilized. Many agencies, Lee says, wait for workers to file complaints, rather than entering the community to inform workers of their rights, and to find bad actors.
The most promising approach, says Lee, is collaboration between government agencies and workers’ centers. Although workers in the industries susceptible to wage theft often aren’t unionized, many are organized through local worker’s centers like the Domestic Worker & Day Laborer Center of Chicago and Houston’s Fe y Justicia.
“Agencies aren’t always in the best position to identify which workplaces have issues or to build trust with workers,” says Lee, adding that worker’s centers are often more embedded in the community.
The cooperation of worker’s centers gathers useful information about labor conditions and can encourage more workers to come forward. Lee pointed to Seattle as an example of a city that has effectively partnered with local community groups — their Office of Labor Standards selected ten community organizations to receive $1 million contracts to provide education and outreach to workers. Reporting by the Philadelphia Enquirer found that, in 2018, Seattle’s Office of Labor Standards received 10 times the number of wage theft questions and complaints than Philadelphia received, a larger city that lacked such a strategy.
Making Them Pay the Bill
But even once wage theft is brought to light, workers don’t always get paid. Across the country, nominally “successful” wage theft lawsuits often result in empty judgments: just because a judge or jury agreed that a worker experienced wage theft, it doesn’t always mean that the worker will be able to collect her back wages.
A report by the National Center for Law and Economic Justice found at least $125 million in unpaid wage theft judgments and orders within New York City alone. Carmela Huang, a supervising attorney at New York City’s Legal Aid Society, says “it’s just far too easy for employers to transfer their assets.”
As an example, Huang explains, a restaurant owner faced with a high-dollar wage theft lawsuit will recruit a friend to create a new corporation and transfer the restaurant to the new corporation. That makes the original corporation facing the lawsuit nominally unable to pay its wage debts.
“For more than a decade employer-side attorneys have been advising clients on how to hide their assets — it is definitely a part of the practice to advise clients on how to make themselves judgment-proof,” says Huang.
That’s why the Legal Aid Society called on New York Governor Andrew Cuomo to sign the SWEAT Act, which would have allowed workers to place a lien on their employers’ assets while wage theft litigation was ongoing, stopping bad companies from using suspicious transfers to hide assets. Cuomo vetoed the SWEAT Act on January 2.
Our country arrests 1.5 million people for burglary and larceny per year — but workers facing stolen wages are routinely deprived of justice. Businesses can dial 911 and expect the cops to show up to arrest a shoplifter, while millions of Americans work for poverty wages, as victims of theft from their employers, with little hope of recourse.
Flagstaff Needs A Raise Coalition says to end wage theft, we should lift the threat of deportation, guarantee workers access to the legal system, build strong wage theft enforcement agencies, and close the loopholes that allow employers to shirk responsibility to pay owed wages.
Editors note: The Meteor is currently interviewing service employees and employers in Flagstaff, building a data base of employees about experiences with the minimum wage including those experiencing wage theft. We will write in the near future about those stories, the stories of locally owned businesses, and a newly revealed initiative drive by the Chamber of Commerce attempting to launch a repeal of the minimum wage.
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