The Potluck

Study: 32,000 Twin Cities area workers illegally paid less than minimum wage

By: - November 15, 2023 9:59 am

Researchers found workers in food service were among the most likely to be illegally paid less than minimum wage. In 2018, a McDonald's franchise in Minneapolis agreed to pay $20,000 in back wages and penalties as part of a settlement agreement for paying workers less than the city's minimum wage. Photo by Joe Raedle/Getty Images.

Employers are illegally paying less than minimum wage to an estimated 32,000 workers in the Twin Cities metropolitan area, according to a new report from the Workplace Justice Lab at Rutgers University.

On average, workers were shorted $2,700 per year over the past decade with violations concentrated in high-demand, service sector jobs in places like restaurants, preschools, hair salons and entertainment venues.

Researchers found that Black and Latino, immigrants, young, female and part-time workers — who disproportionately fill those service sector jobs — face higher rates of minimum wage theft violations than white, Asian and male workers.

Estimating the scale of minimum wage violations is notoriously difficult because employees are often hesitant to file complaints and employers are unlikely to admit to violating wage laws. Employers and employees may also be unaware that any violation is occurring.

The researchers estimated violations by examining responses to the Census Bureau’s Current Population Survey. They looked at how many people reported hourly earnings lower than the minimum wage, while making some educated guesses to account for limitations in the data. For example, the data isn’t detailed enough to know every worker’s location and employers’ size, both of which affect minimum wage rates. The researchers say their final tally likely understates the scale of minimum wage violations given their conservative methods of data analysis.

The report’s authors — Rutgers University’s Jake Barnes, Janice Fine, Daniel Galvin and Jenn Round — praised the city of Minneapolis for its Labor Standards Enforcement Division, which was created in 2016 and enforces the city’s minimum wage, sick leave and other labor standards.

The Labor Standards Enforcement Division is unique in enforcing wage and sick time standards through directed investigations and not just responding to complaints from workers. Yet the report’s authors note the city has just three investigators to enforce standards affecting nearly 250,000 workers in Minneapolis. They recommend the city bolster its investigatory capacity.

“Minneapolis is a national leader in its commitment to robust, effective enforcement,” said Fine, director of the Workplace Justice Lab at Rutgers University, in a statement. “Unfortunately, we can see from the underlying violation rates that wage theft remains a pervasive issue. Our findings point to the urgent need for more investigators and increased support for strong co-enforcement partnerships.”

Rutgers’ Workplace Justice Lab is also collaborating with the Minneapolis Labor Standards Enforcement Division and the Main Street Alliance on a pilot project to provide bookkeeping and payroll services to small businesses, which receive a large share of complaints about wage violations. The report’s authors note 54% of minimum wage complaints made to Minneapolis during the study period came from workers at small businesses.

That effort is funded by the Kellogg Foundation, which also funded the report. The Workplace Justice Lab does not receive any money from the city of Minneapolis.

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.

Max Nesterak
Max Nesterak

Max Nesterak is the deputy editor of the Reformer and reports on labor and housing. Previously, he was an associate producer for Minnesota Public Radio after a stint at NPR. He also co-founded the Behavioral Scientist and was a Fulbright Scholar to Berlin, Germany.