Worker Exploitation Hurts All Taxpayers

One of the cruelest crimes is stealing money from the poor, from people who have worked hard to earn urgently needed money required to put food on the table and keep a roof over their heads.

It’s particularly troubling when the person taking the money is the boss, who greedily doesn’t pay workers the wages due them or cheats them out of overtime pay. But that crime is becoming all too commonplace in Orange County, where a growing number of corrupt bosses deal in the so-called underground economy. In the state, it involves about $40 billion in off-the-books cash business transactions each year, according to a 1985 California study.

These marginal operators seeking to cut expenses withhold portions of salaries but don’t pay the legally required state disability, unemployment insurance and Social Security funds. Nor do they deduct and pay state and federal taxes. The cheating is especially prevalent in the construction, landscaping, housework and garment industries.

In the process, however, these fly-by-night operators not only exploit their workers by withholding pay but also victimize honest competitors and taxpayers.

Taxpayers are cheated by losing withholding taxes not paid to the state and having to pay medical expenses for job-related injuries that would have been covered by worker’s compensation had the employers paid for it. Taxpayers lose again when they must pay the welfare program costs for people who wouldn’t have needed relief if they had received the money they had earned.

Legitimate firms suffer in lost contracts because the underground operators who don’t pay taxes, worker’s compensation and other mandated program costs can unfairly underbid business rivals that do comply with the law.

It’s getting so bad in Orange County that on Thursday the county Human Relations Commission held a forum on worker exploitation in hopes of increasing community awareness and interesting other organizations to join the commission in helping workers negotiate with employers for their hard-earned pay and other benefits.

The state has the legal enforcement authority. The Santa Ana office of the state Division of Labor Standards Enforcement is now the busiest in California. Wage claims in Orange County grew nearly 25% from 1986 to 1987, when nearly 5,000 claims were filed.

But it often takes months for the state machinery to grind out results. That’s time a worker living from payday to payday doesn’t have. The loss of wages for a week or two can mean the difference between paying the rent or becoming homeless.

That’s one reason the Orange County Human Relations Commission began trying to reach workers in 1985 to educate them about their rights and try to resolve disputes and recover withheld wages for employees. In about half the cases the commission is successful in recovering workers’ money. But complaints handled by the commission have tripled since 1985. It can use the help of other community organizations.

There is a need to streamline the state investigation process to reduce the time lag that discourages people from trying to recover the wages that are rightfully theirs. Facilitating the filing of claims also will make it easier for the state Labor Commission to learn the identities of the underground businesses that cheat the state out of an estimated $2 billion in taxes each year.

Orange County benefits greatly from one of the strongest job markets in the state and nation. That market is weakened by illegal and unfair labor practices that hurt workers, taxpayers and legitimate businesses.