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  5. Compliance and Enforcement of Labor and Employment Law
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Compliance and Enforcement of Labor and Employment Law

Paper Session

Sunday, Jan. 5, 2025 1:00 PM - 3:00 PM (PST)

Hotel Spero, Californian
Hosted By: Labor and Employment Relations Association
  • Chair: Anna Stansbury, Massachusetts Institute of Technology

Labor Standards Compliance and Worker Complaints: New Data and Insights

David Weil
,
Brandeis University
Daniel Schneider
,
Harvard University
Goncalo Costa
,
Harvard University

Abstract

Violation of worker rights and protections are pervasive and well documented. This paper draws on several novel linked data sets to estimate the comparative prevalence and severity of labor standards compliance problems versus complaints by sector, place, and firm. The primary data source arise from the Shift Project, based at the Harvard Kennedy School which has collected detailed survey data from over 200,000 hourly workers employed at large firms in the service-sector since 2016. These data contain fine-grained reports of on-the-job experiences, including wage theft, failure to receive PSL, inadequate breaks, and lack of advance notice of schedules, as well as unique data on the exact establishment at which respondents are employed. The data provide us with a measure of labor standards violations. We will merge the Shift survey with administrative data on worker complaints and on the outcome of investigations that we have secured through Good Jobs for All / Violation Tracker, as well as with an establishment-level database from Reference USA regarding outlet locations. We will use the combined data to provide measures of labor standards problems based on the prevalence (how common are wage theft and other violations); severity (how serious are typical violations per worker) and likelihood of complaints (lodging complaints for selected violations of a variety of labor and employment protections contingent on underlying conditions in those workplaces).

Management Practices, Workplace Injuries, and the Effects of Safety Regulations

Matthew Johnson
,
Duke University
Nicholas Bloom
,
Stanford University
David Levine
,
University of California-Berkeley
Alison Pei
,
Duke University

Abstract

Workplace injuries are a massive economic burden, yet they persist across a wide range of workplaces. Why? Reducing injury risk entails financial and opportunity cost, but it may also require adoption of management practices that are slow to diffuse. Linking confidential data from the Census Bureau with data on workplace injuries, we find that establishments with more structured management practices (monitoring production, setting targets, and establishing incentives) have substantially lower injury rates, a relationship that holds within industries and within establishments over time. We then examine how this variation in management influences the effects of government safety regulations on workers and firms. Enforcement inspections by the Occupational Safety and Health Administration reduce injuries, but only at establishments with few structured management practices; the effect on well managed workplaces is statistically indistinguishable from zero. Inspections also lead establishments to adopt more structured management practices. Inspections have no detectable effect on establishment survival, investment, or productivity.

Does Wage Theft Vary by Demographic Group? Evidence from Minimum Wage Increases

Jeffrey Clemens
,
University of California-San Diego
Michael Strain
,
American Enterprise Institute

Abstract

Using Current Population Survey data, we assess whether and to what extent the burden of wage theft — wage payments below the statutory minimum wage — falls disproportionately on various demographic groups following minimum wage increases. For most racial and ethnic groups at most ages we find that underpayment rises similarly as a fraction of realized wage gains in the wake of minimum wage increases. We also present evidence that the burden of underpayment falls disproportionately on relatively young African American workers and that underpayment increases more for Hispanic workers among the full working-age population.

Incentives to Comply with the Minimum Wage in the U.S. and the U.K.

Anna Stansbury
,
Massachusetts Institute of Technology

Abstract

There is substantial evidence of minimum wage noncompliance in the US and the UK. In this paper, I compile new, comprehensive data on the costs minimum wage violators incur when detected. In both countries, the costs violators face upon detection are often little more than the money they saved by underpaying. To have an incentive to comply under existing penalty regimes, typical US firms would thus have to expect a 47%-83% probability of detection by the DOL, or a 25% probability of a successful FLSA suit. In the UK, typical firms would have to expect a 44%-56% probability of detection. Actual probabilities of detection are substantially lower than this for many firms, and would likely remain so even with realistic increases in enforcement capacity. Improved enforcement alone is thus insufficient: expected penalties must also substantially increase to ensure that most firms have an incentive to comply.

Discussant(s)
Matt Knepper
,
University of Georgia
Ioana Marinescu
,
University of Pennsylvania
Brad Hershbein
,
WE Upjohn Institute
Michael Reich
,
University of California-Berkeley
JEL Classifications
  • J0 - General