Worker productivity up, along with wage violations

The following is not a full transcript; for full story, listen to audio.

Some economic news that seems to be good news is may be better for the corporate bottom line than it is for workers. Productivity has grown at its fastest pace in almost six years this spring, up almost 6.6 percent. Labor costs, meanwhile, have shown the biggest drop since 2000.

“New York Times” reporter Jack Healy explained on “The Takeaway” why these numbers are great for corporations, but may not be such good news for workers.

“Neccessity is the mother of productivity increases. Corporations have had to cut their bottom lines pretty drastically over the last year. For many of them, labor costs are one of the biggest items on their budgets. What has been happening is they’ve been asking more of their workers. That is what we see in these numbers. Productivity is up by the largest percentage increase since 2003 — we are seeing the total output from businesses has fallen a little bit, but it hasn’t fallen as much as the number of hours worked. Businesses are doing a little less with a lot less.”

Annette Bernhardt, the policy co-director for the advocacy group National Employment Law Project, is one of the authors of a report showing a surge in wage and workplace violations, “Confronting the Gloves-Off Economy: America’s Broken Labor Standards and How to Fix Them.” The report compiled interviews with more than 4,000 low-wage workers. What they described was an astounding number of violations — from unpaid overtime to employers not paying minimum wage — and an overall lack of enforcement.

“We had already been hearing from groups on the ground that workers were coming in saying that they weren’t being paid the minimum wage, or weren’t being paid overtime,” said Bernhardt. “The problem was that nobody had any data on it. So, we went out and surveyed 4,000 low-wage workers last year — Chicago, New York City, L.A. — we found widespread, pervasive violations. It is a pretty grim story.”

This study shows a systematic vulnerability of workers on the low end of the pay scale, subject to minimum wage, and subject to whimsical and capricious hour regulations.

Bernhardt added, “There is no oversight at all. I think that it is the systematic part that it really important. People tend to think, ‘this is just the informal economy, it’s just at the periphery, it’s just a few employers.’ This is industry by industry. The violations were so prevalent. A quarter of workers didn’t get the minimum wage, more than 70% that worked overtime didn’t get overtime. 

“A good example is the restaurant industry in New York City, where I think overtime has basically become voluntary. That is what advocates are telling us as well. The pervasiveness is really signaling that this is business strategy. This is not one or two employers just deciding to break the law.”

Amy Carroll is an attorney at a community center in Brooklyn, New York: Make the Road New York. The group represents thousands of workers who have seen workplace violations firsthand. She says that the victims of labor violations often remain silent, not reporting the infractions.

“It’s industry-wide, so they think that’s just what’s allowed to happen,” Carroll said. “We have restaurant workers, for example, doing deliveries. If you get deliveries in New York, there is a really high chance that your delivery worker is not being paid appropriately. Workers are working 10, 11, 12 hours per day, for maybe $10 a shift, $15, $20 a shift.”

Bernhardt says that a missed day or two of work at that pay rate can be devastating. These workers continue working despite the poor conditions and wages as a result, rather than face the loss of income that might result from the reprisal firing of someone the employer may view as a whistle blower. This too, is illegal, but still happens.

She advocates for community-level intervention, “That is why pro-active enforcement by community groups, by the Department of Labor, so that restaurants, laundries, and car washes know that they are going to be found out, and the fines will be really high.”

The Department of Labor is to blame, according to Carroll, “The problem, though is that in the last eight years under the Bush administration, the Federal Department of Labor was really dropping the ball, and I would say, bordering on dereliction of duty. There was weak enforcement, ineffective enforcement. The Government Accountability Office has now issued three reports showing this.

“We can’t put the responsibility on workers to come forward when they are vulnerable. It has to be the enforcement agencies. We have to increase funding for investigators. They have to go out there on their own, get back on the ground, and send the signal that compliance is not optional.”

“The Takeaway” is a national morning news program, delivering the news and analysis you need to catch up, start your day, and prepare for what’s ahead. The show is a co-production of WNYC and PRI, in editorial collaboration with the BBC, The New York Times Radio, and WGBH.

More at thetakeaway.org