Does wage theft take $1 billion a year from workers in New York state?

As New York state legislators consider passing tougher laws on wage theft — the denial of a portion of employees’ income by their employers — one assemblywoman put a figure on the amount the state’s workers lose annually.

Assemblywoman Linda Rosenthal, D-Manhattan, told the investigative news outlet ProPublica on Feb. 6 that "each year, more than $1 billion is stolen from the pockets of hardworking New Yorkers by unscrupulous employers, often targeting the workers with the fewest resources to fight back."

We found the figure in several analyses of this issue in recent years, including one from 2017 that Rosenthal’s office cited. The most recent estimate suggests that $1 billion may be on the low end.

Wage theft occurs when "workers are denied their legally owed wages and benefits," said Rebecca Berke Galemba, an associate professor at the University of Denver’s Josef Korbel School of International Studies.

Galemba said wage theft can take many forms, including being paid below minimum wage, being paid less than an employee’s work agreement, a denial of overtime or meal or rest breaks, improper or illegal deductions from the worker’s paycheck, the withholding of tips, the misclassification of workers and/or outright nonpayment of what workers are owed.

Jacob Barnes, a researcher with Rutgers University’s Workplace Justice Lab, said several kinds of businesses often stand out as having high rates of minimum wage violations. These include private households that employ domestic workers and groundskeepers; food service and drinking establishments; personal service providers such as beauticians, massage therapists, parking attendants and animal caretakers; and farms.

New York state already has laws to counter wage theft. The Wage Theft Prevention Act was signed into law in 2017 but was updated with stronger provisions in a bill Gov. Kathy Hochul signed in September 2023. The new provisions include tougher penalties against violators, categorizing a violation as larceny.

Rosenthal and other legislators, including state Sen. Jessica Ramos, D-Jackson Heights, want to enact additional legislation to strengthen the laws further.

• S. 8451 would suspend certain liquor licenses of employers who commit wage theft. 

• S. 8452 would give the state commissioner of labor, as well as the state workers' compensation board, the authority to issue stop-work orders if wage theft is discovered.

• S. 8453 would give the state commissioner of taxation and finance the power to suspend certificates of authority of employers that violate wage-theft laws. 

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The earliest citation for the $1 billion figure can be found in a 2011 discussion at Cornell University’s Industrial and Labor Relations School.

During the discussion, which involved lawyers for plaintiffs and management along with wage enforcement officials, participants "agreed it was necessary to address the money — close to $1 billion — stolen from low-income workers each year," a program summary shows.

Esta R. Bigler, director of the Cornell school’s labor and employment law program and a participant in the 2011 discussion, told PolitiFact New York that she did not have updated wage theft statistics.

The $1 billion annual figure was cited again in a U.S. Labor Department analysis cited by ProPublica. The analysis compared New York workers’ reported wages to the relevant minimum wage levels. It found that employers took up to $1 billion from their workers annually. According to the analysis, New York ranked eighth-highest in the amount of back wages owed per worker.

A subsequent study, conducted in 2014 by the Economic Policy Institute, a labor-backed think tank in Washington, D.C., found that in the 10 most populous U.S. states, 2.4 million workers lost $8 billion in 2015 to minimum wage violations, or nearly a quarter of their earned wages, annually. The study found this type of wage theft affected 17% of low-wage workers.

The group found that in New York, workers lost $965 million from minimum wage violations that year, which is close to $1 billion. (This is the source Rosenthal’s office cited to PolitiFact.)

However, minimum wage violations are only one type of wage theft, so if that estimate is accurate, the total annual amount lost to wage theft in New York could be higher.

The most recent estimate, made in 2023 by the investigative journalism outlet Documented, is that New York state wage theft is $1 billion to $4 billion annually. This estimate is based on data from the New York state and U.S. labor departments that the outlet obtained through freedom of information and open records requests.

Rosenthal said, "Each year, more than $1 billion is stolen from" workers in New York state through wage theft.

The estimates of this figure span a decade and a half and come with a wide range of uncertainty.

But this figure, or one close to it, was cited in 2011, 2014 and 2017, and a 2023 estimate offered a range of $1 billion to $4 billion.

We rate the statement Mostly True.