Wage Theft Is America’s Hidden Workplace Crisis — Misunderstood by Workers, Unreported by Victims, and Damaging to Employers
Verfico's new study exposes the alarming prevalence of wage theft—
and its consequences for both companies and employees.
Purpose of this Study
In the shadows of the American workforce, a hidden crisis affects millions of workers and businesses across various industries: wage theft. While billions of dollars in stolen wages have been recovered for workers in recent years, public awareness of wage theft remains alarmingly low.
Wage theft encompasses a range of practices, such as misclassifying employees as contractors, not paying overtime, asking employees to work off the clock, not paying minimum wage, withholding a part of an employee's pay for taxes, and paying employees late.
Wage theft often goes unnoticed, leading to severe consequences for its victims: both workers and honest businesses. Many cases stem from misunderstandings or lack of knowledge, highlighting the need for greater awareness and education — and not just for the workers. Companies also need to be educated in order to avoid the risks associated with inadvertently committing wage theft.
Last month, we conducted the 2023 Verfico Survey: Wage Theft in America. We surveyed 1,000 U.S. adults to gauge their general understanding and awareness of wage theft. We then informed respondents about the meaning of wage theft and asked about personal experiences and opinions on potential solutions.
Key Findings
Only a fraction of Americans fully understand what “wage theft” means.
Despite the increasing prevalence of wage theft in today's workforce, many Americans do not fully understand what it is. This lack of awareness is especially concerning given the practice’s impact on workers and industries, as we explore throughout this report.
While some respondents were familiar with more common manifestations of wage theft, a vast majority remain oblivious to the various forms it can take, leaving them vulnerable to injustice.
When asked to define wage theft, only 20% of survey participants could accurately describe it as an employer withholding a portion of an employee's pay. The remaining respondents either lacked clarity or were too general in their answers.
Notably, 10% of participants mistakenly believed wage theft refers to situations where employees steal from their employers. This misconception is more prevalent among Gen X (13%) and less common among Gen Z (5%).
When shown a variety of employment scenarios and asked to identify those representing wage theft, nearly half (49%) recognized the failure to pay overtime as a form of wage theft. But far fewer identified scenarios such as asking employees to work off the clock (43%), misclassifying employees as contractors (35%) or paying employees late (24%) as wage theft.
A considerable number of Americans have personally experienced or know someone who has experienced wage theft.
Despite the widespread lack of understanding regarding the term "wage theft," our survey found that many Americans have personally experienced or know someone who has experienced this problem.
According to the survey, 38% of Americans have personally experienced (18%) and/or know someone who has experienced (27%) wage theft. Seven percent of respondents said they had both experienced wage theft personally and knew others who had as well.
These numbers are even higher in the construction industry, with 41% of construction workers reporting personal experiences or knowing someone affected by wage theft.
These numbers highlight the importance of addressing the problem with increased education, particularly in the construction industry and other sectors showing a higher incidence of wage theft.
Fear of reprisals and lack of knowledge prevents most from reporting wage theft— and among those who did report wage theft, many did not receive their wages back.
The connection between the lack of understanding and the prevalence of wage theft becomes even more evident when examining reporting rates.
Of the 18% of respondents who said they had personally experienced wage theft, 57% said they didn’t report it to authorities, compared to 38% who did.
Among those who did report wage theft, 61% said they received the pay owed them—but 39% were left empty-handed.
Among those who did not report wage theft, 31% said they did not report it because they feared reprisals, 28% said they did not know who or where to report it, 22% said they didn’t want to cause trouble, and 12% said it was because they weren’t able to prove it.
Fear of reprisal was particularly pronounced in the construction industry, where 48% of respondents said they believed that employers would fire or pressure employees to quit if they reported wage theft. This highlights the need for education and support systems to help workers feel empowered to report wage theft when it occurs.
The construction industry is among the top three sectors associated with wage theft, in addition to food service and retail.
As the survey delves deeper into the impact of wage theft, it reveals that the construction industry is one of the top three industries associated with wage theft by respondents.
When asked to identify the industries where they thought wage theft was most likely to occur, the top answer was food service (43%), followed by retail (32%), construction (29%), hospitality/tourism (19%), transportation (14%), healthcare (12%), professional services (8%), state or federal government (7%), and pharmaceutical (5%).
Along with its legal risks for the construction industry, wage theft damages brand reputation as well.
While some employers engage in wage theft knowingly, many others do not—particularly in the construction industry, where a contractor’s visibility into the labor practices of subcontractors has traditionally been limited. Either way, employers risk serious criminal and civil penalties—as well as reputational damage.
Only 42% of respondents, for example, said they believe that “employers sometimes commit wage theft by mistake”—meaning that when mistakes do occur, many Americans will not give construction companies the benefit of the doubt.
Respondents said that when construction companies practiced wage theft, it made them concerned about other aspects of those companies’ operations. Specifically:
72% of respondents said they worried that construction companies that committed wage theft would cut other corners as well.
Many respondents also said they worried these practices would result in slower construction times (53%), lower quality work (49%), and a negative impact on communities that rely on construction jobs (63%).
Improvements in technology, education, and public policy are seen as key steps to ending wage theft in the construction industry.
The survey results indicate that, once educated on the problem of wage theft, Americans favor a multifaceted approach to addressing this problem in the construction industry—combining technology, education, and legislation to create an environment where wage theft is less likely and easier to manage.
74% endorsed harsher penalties for construction companies committing wage theft.
68% recommended educating construction workers about wage theft and how to report it.
59% said they believed new technology could help employers reduce wage theft.
54% advocated educating the public about wage theft to tackle the problem.
“This survey underscores the critical need for greater awareness and understanding of wage theft, especially in industries like construction,” said Matthew DeSarno, CEO at Verfico. “By embracing the right combination of education, technology, and public policy solutions, we can empower both employers and employees to take a stand against wage theft, ultimately fostering a more just and equitable workplace for everyone.”
Methodology
Verfico used the third-party survey platform Pollfish to conduct a survey of 1,000 U.S. adults from April 25-26, 2023. Researchers reviewed all responses for quality control.