At struggling firms, workers holding on.

Wage theft a growing problem in hard times

June 26, 2011|By Jane M. Von Bergen, Inquirer Staff Writer
  • Shannon Schuler's pay at the beauty salon Tommi's changed from paycheck, to cash, to sporadic, then nearly stopped. The recession made her stay.

For a month after she started at Tom and Nikki Wong's upscale beauty salon in Center City, Shannon Schuler received regular paychecks, but then the payments started coming in cash, then sporadically, and then hardly at all.

Schuler would have quit, but she didn't think she could find another job, especially in the recession.

Tom and Nikki Wong, the owners of Tommi's Lifestyle Boutique on Chestnut Street, also hired photographer Kateri Likoudis to beef up their wedding business.

Same pattern for her, a few short payments, then sporadic cash, and then hardly anything: "I told them I can't afford to work here anymore," Likoudis said.

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"My student loans were in default. I had a medical bill that had tripled because I hadn't paid it. I was living off cans of beans. I couldn't make credit card payments, and I had to borrow money from my ex-boyfriend to pay my rent.

"They owed me enough money that I was afraid to leave," she said. "I kept thinking that if I stayed, I'd get paid."

Wage theft is a perennial problem, but tough economic times add complications.

In a good economy, unpaid workers will cut their losses more quickly, assuming they can find another job. But a recession makes people hang on longer in hopes of getting paid, partly because they see no better alternative, say lawyers who have been representing plaintiffs in these cases for years.

At the same time, companies may also be struggling, exacerbating the situation.

"Business was doing bad and is still doing bad," Nikki Wong said, explaining why Schuler, Likoudis, and some of their coworkers didn't get paid. She said she expects an investor to put money into the company so she can pay them soon.

Wage theft happens in many sectors, particularly those that pay low wages, have few workers at any given location, and are not easily organized by unions, according to a 2010 report written for the U.S. Department of Labor by Boston University economics professor David Weil.

Undocumented immigrant workers are particularly vulnerable because they are afraid to complain, advocates say. (In enforcing these cases, the U.S. Labor Department does not ask about immigration status.)

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