Common Good Iowa

A Heist in Plain Sight: Wage Theft in Iowa

October 13, 2022 | A new report from Common Good Iowa finds that employers are stealing over $900 million a year from an estimated 250,000 Iowa workers — about 1 in 7 workers and their families. Report author Sean Finn, policy analyst with Common Good Iowa, analyzes data from the Bureau of Labor Statistics and Iowa Workforce Development and U.S. Department of Labor enforcement records. He also lays out a series of policy recommendation, showing what local and state officials can — and must— do immediately to stop wage theft.

Full report | Methodology appendix | Media release

Executive Summary

No matter our color, zip code or the field we work in, all Iowans deserve to be paid for our work. This is a foundational right of Iowa workers, but as a state we are failing to maintain it.

Wage theft is an insidious and growing problem in Iowa. Each year, employers rob workers of over $900 million in legally owed but unpaid wages, harming an estimated 250,000 Iowa workers — 1 in every 7 workers in our state. They are shorted an average of $300 each week. Altogether, wage theft costs Iowans 10 times more than all other theft combined.

In a state with abundant resources and welcoming communities like Iowa, all families should be able to support themselves and build strong futures for their children. By allowing wage theft to continue unchecked, state leaders enable deep and lasting harm to workers, families, responsible employers and our economy. Local, state and federal governments lose $190 million annually in tax revenue due to wage theft. The state of Iowa alone loses about $60 million in sales, excise and income tax revenue — enough to build up to six elementary schools or to expand child care assistance to 10,000 children. Upstanding employers must compete with businesses that use these illegal practices. 

Iowans want a government that protects them from crime and injustices. But of the $900 million stolen by employers each year, government agencies recover an average of just $2 million — less than 1 percent. Although law enforcement officers are found in every Iowa county and town, the state employs only two wage-claim investigators for over a million workers.  

State governments across the nation are passing legislation to protect workers from wage theft. Iowa must move promptly to adopt evidence-based solutions in three categories:

  • Enforce the law

Iowa law prohibits wage theft. State agencies must act like it. This means hiring more investigators, making it easier to file wage theft claims, and getting rid of backwards administrative rules like an arbitrary $6,500 cap on wage claims and a ban on outside assistance. 

  • Strengthen the law

Most employers caught stealing wages get a mere slap on the wrist. Tougher laws, fines and damage awards can reverse the incentive to cheat workers. Iowa also needs stronger anti-retaliation laws to protect wage theft victims who report violations.

  • Empower workers

Education is critical in the fight against wage theft. The best way to reach workers, teach payment rights and push back against bad actors is to invest in trusted community organizations. This co-enforcement approach provides direct support to workers who need it most.

Funding these proposals is a valuable and necessary investment that has been shown to pay itself back several times over. Iowa’s local and state officials must act immediately to stop wage theft. 
 

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