In the shadows of corporate greed and exploitation lies a sinister crime that is silently perpetrated, leaving countless victims in its wake—a crime that affects millions of hardworking Americans every year and sucks billions out of our economy —Wage Theft. No industry is immune to this insidious crime, from restaurant workers to construction laborers. On this episode of Pitchfork Economics, we are joined by Terri Gerstein, Director of the Labor Initiative at NYU Robert F. Wagner Graduate School of Public Service, to unpack the chilling truth behind these workplace crimes, learn who the perpetrators are, and uncover how they get away with it. Most importantly, what can be done to stop them?
Terri Gerstein is the Director of the NYU Wagner Labor Initiative, at NYU’s Robert F. Wagner Graduate School of Public Service, which explores and helps activate the often-untapped potential of government in safeguarding and advancing workers’ rights. Previously, Terri enforced labor laws in New York for 17 years, including as Labor Bureau Chief in the New York State Attorney General’s Office.
Crime music bed by Power Music Factory
News clips from CBS News, CBS Miami, and CBS Philadelphia
Twitter: @TerriGerstein
Further reading:
Report mentioned in the episode from the National Coalition Against Insurance Fraud: The Costly Crime and Impact of Workers’ Comp Premium Fraud
The Role of State Attorneys General in Protecting Workers’ Rights
Report: How district attorneys and state attorneys general are fighting workplace abuses
More states should follow new Colorado policy on wage theft
Website: https://pitchforkeconomics.com
Twitter: @PitchforkEcon
Instagram: @pitchforkeconomics
Nick’s twitter: @NickHanauer
Nick Hanauer:
The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.
Speaker 2:
It’s time to build our economy from the bottom up and from the middle out, not the top down.
Nick Hanauer:
Middle-out economics is the answer.
Speaker 2:
Because Wall Street didn’t build this country. Great middle class built this country.
Nick Hanauer:
The more the middle class thrives, the better the economy is for everyone, even rich people like me.
Speaker 3:
This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.
Nick Hanauer:
If someone steals money from their employer, they could be guilty of a serious crime, but what if an employer takes money from their employee’s paychecks? In the shadows of corporate greed and exploitation lies a sinister crime that is silently perpetrated, leaving countless victims in its wake, a crime that affects millions of hardworking Americans every year and sucks billions out of our economy. Of course, we’re talking about wage theft.
Terri Gerstein:
Wage theft costs Americans more than any other type of theft each year.
Nick Hanauer:
No industry is immune to this insidious crime, from restaurant workers to construction laborers.
Speaker 5:
Wage theft means workers not getting money they earn.
Speaker 6:
Wage theft is rampant.
Nick Hanauer:
Today, we’re joined by Terri Gerstein, director of the Labor Initiative at NYU, Robert F. Wagner’s Graduate School of Public Service, to unpack the chilling truth behind these workplace crimes, learn who the perpetrators are and to uncover how they get away with it.
Terri Gerstein:
My name is Terri Gerstein. I’m the director of the NYU Wagner Labor Initiative, and I work to try to help government work more effectively for working people, and how I do that is by focusing on trying to enlist more players in enforcing workers’ rights and help those who are already enforcing workers’ rights to be more effective and build their capacity.
Nick Hanauer:
Well, we are so fired up to talk to you, Terri. I’m not sure if you know, but Pitchfork Economics is this thing that we do at Civic Ventures, but Civic Ventures is principally a policy shop. We find problems and generate policies and build narratives and run campaigns. The issue of wage theft and the proposition around criminalizing it is something that we’re really interested in right now and think it’s the next big step in worker rights, so getting to talk to an expert like you about it is very exciting for us and timely. Why don’t we start by you just explain the problem that we have in the United States and how bad it is and how far behind we are?
Terri Gerstein:
Well, we have a real problem with wage theft and other kinds of workplace exploitation in our country. Some of the commonly cited statistics are that, annually, there’s $50 billion in wage theft. It’s very hard to know the exact numbers because a lot of these crimes are unreported for a variety of reasons, including all the obstacles that workers face in bringing cases like fear of retaliation, for example, but I would note also that wage theft happens not just in a vacuum. Often, there’s clusters of other kinds of employer crimes. There can be, for example, employers cheating on unemployment taxes and not reporting all their workers so that they pay less, employers who cheat on workers’ compensation in order to get a lower premium. There are prosecutors who are bringing cases involving workplace fatalities that are completely avoidable and not unforeseeable accidents. There have been some prosecutions of child labor cases and, in really extreme cases, labor trafficking prosecutions. Really, there’s a whole constellation of employer misconduct that a number of prosecutors are increasingly interested in taking on.
Nick Hanauer:
The problem is that we used to enforce these things a lot more rigorously than we do today. Right? I mean, I was really struck by the statistic in one of the pieces that you’ve recently written that, in 1948, there were a thousand investigators to protect a workforce of 22.6 million and, now, we have 725 investigators for a workforce that’s 160 million. I can’t exactly do that math in my head, but I think that’s like, I mean, basically, one-tenth as many.
Terri Gerstein:
The extent to which we have shrunken our public sector including enforcement is really astonishing. There’s a number of trends over the past several decades that really contribute to a degradation of working conditions and the high rate of violations that we see today. There’s the lack of enforcement resources in those numbers that you cited which I think are really striking. There’s also the decrease in union density because our federal labor laws are really outdated. When you have unions, you have onsite monitors in those workplaces, and you have upward pressure in non-union workplaces because they have to compete to get people, and you also have unions as political actors fighting for stronger standards and fighting for more enforcement resources, so the decline of union density is bad for labor violations as well.
There’s a whole number of general trends. The fissuring of the workplace leads to higher workplace violations. That’s when employers, businesses, instead of directly employing people, they use subcontractors and staffing agencies. We saw a lot of this in relation to the recent child labor cases that have come to light, but all of these broader trends lead to a situation of much more employer impunity than certainly is appropriate.
Nick Hanauer:
Yeah, and it just strikes me in this conversation that we should just back up slightly and just more generally address the issue here. The issue here, it seems to me, and you can correct me if you think I’m wrong, is that we have criminal laws in our country that most definitely apply to workers. Right? If a worker, for example, steals something from their employer, they will be criminally charged and can go to jail. If you work in a TV factory and you steal a TV that’s worth a thousand bucks, you most certainly, and get caught, you most certainly will be charged and very likely you will be criminally charged and very likely will end up in prison. If your employer on the other hand steals a thousand dollars from a thousand employees by shortchanging on the hours that you’ve worked or whatever it is, even if they get caught, their worst downside is to pay the money back with a little bit of a fine. Isn’t that true?
Terri Gerstein:
Oh, you have hit the nail on the head, and I say exactly that all the time. A lot of times, I think there are prosecutors who feel like, “Well, this doesn’t feel criminal in some vague and articulable way. It just doesn’t feel criminal. It feels civil,” but again, as you said, if a worker embezzled from their employer, no one questions whether that is an appropriate subject for criminal prosecution. We routinely have prosecutions, for example, for workers’ comp claimant fraud or unemployment claimant fraud where there’s a person getting benefits that they shouldn’t be getting. Of course, that is bad conduct, and I’m not a fan of that, but at the same time, when employers cheat on their workers’ comp policies or underpay unemployment, cheat on their unemployment taxes, that, too, is unemployment fraud or workers’ comp fraud. Actually, there was a study from the Coalition Against Insurance Fraud last year that was looking specifically at workers’ comp fraud and found that employer premium fraud really, really dwarfed claimant fraud in terms of the amount of money involved.
Nick Hanauer:
I’m sure it does.
Terri Gerstein:
The impact of employer misconduct on the economy and on communities is really, really considerable. I do think it’s a question of equity to treat these kinds of situations. Sometimes, also people say, “Well, prosecutors can’t do these cases. They have rapes and murders,” but I think most prosecutors do handle property crimes and they handle nonviolent crimes, and so, if you are handling any nonviolent crimes, I think it’s a fair question, “Why wouldn’t these be among that universe of nonviolent crimes that you’re routinely prosecuting?”
Nick Hanauer:
Right. For anybody listening, I think it’s pretty obvious that, if the worst that can happen is that you’ll have to pay the wages and maybe get a little bit of a fine, that just becomes the cost of doing business for a lot of people. Right?
Terri Gerstein:
Absolutely.
Nick Hanauer:
They absolutely don’t care.
Goldy:
Was it Mitt Romney who made the case that corporations are people when he was running? The problem here, of course, is how do you lock up a corporation?
Nick Hanauer:
Yes.
Terri Gerstein:
Right. Well, I have a few answers to that. First of all, following up on your comment, Nick, about the consequences, many years ago there were economists who came up with a theory about employer compliance with labor laws, that unethical employers will not comply if the likelihood of detection is too small or if the penalties are too small, and what you’re-
Nick Hanauer:
By the way-
Terri Gerstein:
… speaking about is sort of-
Nick Hanauer:
… you don’t need an economist to tell you that that’s true.
Terri Gerstein:
No, of course, not. I actually cite it all the time. Because I am a lawyer, not an economist, so I’m always excited when economists have a bunch of numbers proving something that I intuitively know to be true from common sense perspective. That’s why I cite Orley Ashenfelter and Robert Smith-
Nick Hanauer:
There you go.
Terri Gerstein:
… who came up with that theory. I do think that, having criminal prosecution involved, it increases the likelihood of detection because you have prosecutors all over the country. I think it also increases the perceived likelihood of detection because it gets media coverage, and so it becomes really salient to people in the way that shark attacks or whatever things that are dramatic are salient, and it increases the consequences, not just the monetary consequences, but it creates a whole new set of reputational consequences. It’s just fundamentally different to be arrested and charged with a crime than to be served with a civil lawsuit or mailed a demand from a labor department.
In terms of your question, Goldy, about what’s the situation with prosecuting corporations, I have a couple of comments about that. As an initial matter, often, the owners themselves are prosecuted as well as the corporate entity. That’s just one initial point, but even when it’s a corporation, it can still be very valuable even though, obviously, a corporation can’t go to jail. The corporation can have significant reputational harm. The corporation can have difficulty in getting government contracts or loans, for example. Also, a criminal prosecution can give the government leverage to get monitoring or other kinds of changed circumstances, change ongoing compliance by the corporation, so I think there are still some real benefits even if it is just the corporation.
One thing I would add as well is there’s a whole conversation about criminal justice reform. Most people focused on criminal justice reform want to end mass incarceration and then shrink the footprint of the criminal justice system, and so how does this vision of prosecuting worker exploitation cases fit into a criminal justice reform vision? There’s a whole separate conversation one could have about that, but one way of threading that needle is prosecuting corporations and getting some of the benefits of the prosecution and the leverage of using the criminal system without bringing potential incarceration into play.
Nick Hanauer:
Okay, but for perspective, what do we have, a million Americans or 2 million Americans in prison today? Putting a couple of hundred CEOs into that system would hardly stress the system. Right?
Terri Gerstein:
Right. I mean, I have thought about this deeply, and I’m comfortable with it. In a lot of instances, I think it’s a question. Realistically, we have a criminal justice system and we have DAs all over the country, and how do we want them to be used? What kinds of cases do we want them to be doing? Do we want them to be prosecuting a mother who stole diapers for her kid or a boss who stole wages from their workers? There are offices that have started doing this work who have reoriented prosecutors who are previously doing other kinds of prosecutions to now pursue employers. I’m comfortable with this, that this fits well within a progressive prosecutor vision, but I just wanted to surface that in relation to prosecuting corporations that that’s one way of thinking about it.
Goldy:
Is there a criminal profile? Is this more typical with large corporations, mom-and-pop, small businesses, midsize businesses?
Nick Hanauer:
Yeah. Who are the worst offenders?
Terri Gerstein:
It’s so interesting. That’s a really great question. Nick, your comment about CEOs made me think about this. It’s very challenging. There is this concept of the fissured workplace that I mentioned before where you have subcontracting. The fissured workplace does make it difficult to go up the chain even civilly. It should be easier. Our definition of employees’ suffer or permit to work under federal law and many state laws, but case law has made it much harder to go up the chain and hold people at the top responsible. It’s even harder to do that in criminal cases because you have to show intent. In most of the criminal cases, I think it’s more mid-size, not huge multinationals that have been involved so far, but in terms of the industries, there are significant violations in the construction industry, restaurants, the service industry generally.
I previously worked in the New York State Attorney General’s office for many years, and I was the labor bureau chief there for a number of years, and we really increased the criminal prosecutions during that time. We had cases, for example, involving home health agencies where they just completely stiffed home health aides for a month or two and continued hiring new people and inducing people to keep working even as they hadn’t paid the people who are currently there. I think there’s a range of industries that are really problematic, and I do think it’s also an issue nationwide in terms of, I don’t know, if it’s possible to say particular regions where there’s a higher rate of this.
Goldy:
It’s weird though. You mentioned construction, restaurants, service, home healthcare. These are industries that disproportionately hire minorities and immigrants, and in most of them women, I can imagine. That seems strange that that’s where you would get all of the wage theft where-
Terri Gerstein:
No, of course.
Goldy:
… people have less power.
Terri Gerstein:
Right. Of course. Of course. I mean, obviously, there are so many studies showing that people of color and immigrants and women are often at higher risk of all kinds of workplace violations, from unsafe workplaces to wage theft, discrimination and everything else.
Nick Hanauer:
Yeah. We have mostly focused around the simplest kind of thing, which is wage theft, which is basically people not paying you what you earned, but there are a bunch of other issues here having to do with workplace safety, for example, that you’ve written about, just super dangerous stuff going on in workplaces that shouldn’t be.
Terri Gerstein:
OSHA, similar to the wage and hour division and our wage and hour enforcers, there’s just really insufficient resources and really inadequate policy protections for workers in our laws. Some of the workplace safety cases, they involve roofers who are killed falling off of a roof because they’re not tied off. You do not need to be an occupational hygienist with 50 years of experience to know, if someone’s four stories or 20 stories off the ground, they need to be tied off.
There are a couple of cases that really stood out in my mind. There was a case last year involving the Massachusetts AG’s office where they indicted an asbestos company that was charged with violating the Clean Air Act based on all of this horrendous, inappropriate, illegal asbestos abatement as well as endangering workers, and there was a worker who actually fell several stories through a roof after repeatedly being denied protective safety equipment. This is where you see these. I’ve come to see mistreatment of workers in some instances. It’s a little bit of a red flag or a canary in a coal mine for all other kinds of violations often. There are some cases that New York and Massachusetts attorney generals have brought in which there’s Medicaid fraud and also wage theft because there’s so many instances-
Nick Hanauer:
Right. No. Bad actors are bad actors.
Terri Gerstein:
Totally. Yes.
Nick Hanauer:
Scumbags are scumbags.
Terri Gerstein:
Again, with the workplace safety issues, another one, a case that came out, and I think talking about cases, sometimes, it feels like war stories, but I think it helps make these issues very concrete for people to be able to understand. To the extent people feel uncomfortable with the idea of this being criminalized, like what does this actually look like? The Manhattan DA recently indicted a construction safety company and its owners who for years had been selling fake workplace safety training certifications in New York City. They estimated that, about three and a half years, they falsely certified that 20,000 workers had completed 40 hours of safety and health training. I think this is a great example of a strategic prosecution because they’re going-
Nick Hanauer:
I bet the margins in that business are pretty good.
Terri Gerstein:
I mean, it’s… Right.
Goldy:
I bet you they didn’t pay those workers for those 40 hours.
Terri Gerstein:
Well, they didn’t do the training, so they just saved their companies, I mean the workers. To me, it’s an example of a really smart strategic prosecution because they’re not going after the workers for having the fake OSHA cards. They’re going after the companies that are telling people, “Here, we’ll give you the card and then you can work,” and that’s really the source of where the danger is originating.
Nick Hanauer:
Terri, can we move to more practical matters? Do we need to change law to make this better or do we merely need to enforce more actively?
Terri Gerstein:
My answer to that is why not both, right? I think, even in the most worker hostile state, if prosecutors comb through the statutes that they have, in most instances, they will be able to find laws that they can already use. There are theft of services laws, larceny, robbery. There are false documents laws, filing a false document or maintaining false business records that can be used. There are different kinds of witness intimidation statutes. In Minnesota, a couple of years ago, they passed a wage theft criminal statute that creates felony status for wage theft above a certain level, but before that, prosecutors were using a statute that sounds like of old-timey to me, which is theft by swindle, and so they-
Nick Hanauer:
I love that.
Terri Gerstein:
… were swindling people. Isn’t that right?
Nick Hanauer:
I love that.
Terri Gerstein:
I think most prosecutors, if they look through the statutes, sometimes they’ll find it, but, also, it’s good to have stronger statutes. Sometimes, these violations might be misdemeanors and prosecutors generally-
Nick Hanauer:
You want them to be felony.
Terri Gerstein:
Right. I mean, I think misdemeanors are still impactful. I think, if an employer is arrested for wage theft and that’s the headline, that’s what other employers are going to look at. They’re not going to say, “Well, that was just a misdemeanor, so I don’t really care if I get arrested.” I think you still get deterrence, but felonies, obviously, convey a greater seriousness and give more leverage in terms of your ultimate outcome.
Nick Hanauer:
Yeah. I mean, how much do you have to steal as a individual for it to be a felony?
Terri Gerstein:
Yeah. I don’t know that off the top of my head, but I do know that there’s a handful of states that have created felony status for wage theft and, in most cases, it’s in the one to $2,000 range, and they were doing that to create parity with other kinds of thefts.
Nick Hanauer:
Yeah. If you steal a TV for 2,000 bucks and it’s a felony, then if you steal wages for 2,000 bucks, it should be a felony.
Goldy:
I hope the “three strikes and your out” laws apply as well.
Nick Hanauer:
Yeah. Exactly. Exactly. Okay, here’s another practical question. Who do you go after in the corporation?
Terri Gerstein:
It just depends on the facts. It depends on what facts you have and who knew what. I mean, one question that comes up a lot is a lot of these cases could be brought either civilly or criminally, and how do you figure out what’s a criminal case versus civil? The answer is, if you have a different standard of proof beyond a reasonable doubt instead of preponderance of the evidence, you also have to show intent.
When I was in the New York AG’s office and I was the labor bureau chief and we had both kinds of jurisdiction, we had a number of factors, but if I had to sum it up in one sentence, it would be was there any question that this was inadvertent versus totally knowing and intentional? The question of who you charge, some of those same issues come up in terms of if it’s someone who’s many layers up and really you can’t demonstrate that they had much of a connection to this actual conduct, I think that makes it a little bit harder. Again, it depends on the exact statute that you’re working with and it depends on the facts you have.
Nick Hanauer:
Yeah. Interesting. I mean, on the one hand, the buck truly does stop at the top, right? If somebody is practicing wage theft in an enterprise that you manage, they’re not doing it by accident.
Terri Gerstein:
That’s why I would like you to write these laws.
Nick Hanauer:
Yeah. Exactly.
Terri Gerstein:
Right?
Goldy:
I’m curious. You write about how a lot of these prosecutions are being done at the state and local level by state attorney generals and prosecutors. These are elected officials largely. They’re offices. Is this prosecution bipartisan across the states, or are Republicans and Democrats alike prosecuting wage theft?
Terri Gerstein:
Well, I try to follow it as much as I can. I don’t know of every single prosecution that has happened anywhere in relation to worker exploitation, but I really do try to follow it. There’s a big cluster of prosecutors engaged in this in New York and California as you might expect, and then there are some in other places. The Twin Cities in Minnesota have quite a few. I think that, generally, it is prosecutors who self-identify or are identified as progressive prosecutors or criminal justice reformers who are most interested in this and in thinking about how to use their powers in new and differently oriented ways, but there are some who are more traditional prosecutors who are focused on this.
For example, in San Diego, the San Diego DA had been a Republican, is now independent and is one of the offices that has created a worker protection unit and is really, really engaged in this area. My sense is that there aren’t really prosecutors on the right who are working on this. To be honest, I would be concerned about the fate of immigrant workers if they were to get engaged in this area, frankly. They aren’t really on the right, but I think it’s like a continuum from the left to the center who are, whatever left means in a criminal justice context, but from more progressive to the center who are engaged in this.
Goldy:
I don’t know. The right claims to be so tough on crime, I guess. You’re telling me it depends on the crime-
Terri Gerstein:
It depends on the crime and it depends on-
Goldy:
… and the criminal.
Terri Gerstein:
Exactly. Exactly. No. Everybody talks about there’s the whole conversation about defunding the police, but we have defunded all of those who police workplaces to try to keep workers safe and paid and fairly treated. At the end of last year, we had 733 minimum wage, overtime, child labor investigators for the whole country. That is a significant defunding, for sure.
Goldy:
In the same way that we’ve defunded the IRS and their ability to go after, yeah, big tax cheats, I’m sure it’s just totally coincidental. There’s nothing in common between these two.
Terri Gerstein:
Right. Of course.
Goldy:
Is it your view that the action on these issues should be in the states or federally?
Terri Gerstein:
Again, my answer is why not both? I mean, I focus in my work primarily on state and local action for a variety of reasons. I think there’s a lot of people who are in the advocacy policy, all of these worlds who focus on the federal government and on federal labor enforcement, and there’s really much less support and much fewer resources and just different methods of playing a role in relation to state and local, and I just see potential everywhere at the state and local level. I think that they have the possibility at times, when the federal government is friendly, states and localities can really be the cutting edge in terms of protecting workers and, when the federal government is not friendly to workers, state and local are all that we have as our remaining safeguard against all kinds of employer impunity and violations. I think this should happen at both levels, but because of all of the untapped potential and so much that can be done at the state and local level, that’s why I’ve been generally focusing on that area.
Nick Hanauer:
Okay. Is there a playbook for best practices?
Terri Gerstein:
Not yet. I’ve written a report about this. There are several webinars that I’ve helped organize and I’ve been part of. I put together a working group. If I were a little more polished, I would call it a community of practice or community of learning, but I put together a cohort of prosecutors from around the country. We have maybe 25 or 30 local DAs and prosecutor’s offices and then another dozen or so AGs, and we have monthly virtual meetings that I convene and that I facilitate and put together the agenda and people present case studies. That’s not really the same as a playbook, but it’s a lot of building that community helps people learn from each other. I think we do need more materials in terms of a playbook for how to do this, but I think the EPI report that I wrote several years ago really gives people a very good idea of how to get started.
Nick Hanauer:
Interesting. Interesting. Just parenthetically, is there somebody from Washington State who participates in your group?
Terri Gerstein:
Yes, there is. We have someone from the Washington AG’s office and the King County DA’s office, so you guys are covered.
Nick Hanauer:
Great. Excellent. Excellent. Okay. Excellent.
Terri Gerstein:
One other thing that I think has a lot of potential in terms of criminal prosecution is that where you have prosecutors are independently elected, as you noted, and so where you have prosecutors who are in progressive cities, in conservative states, there’s a real opportunity for action and impact. If you think about it, their state doesn’t have worker protection laws, barely at all, they don’t have a state labor department that’s super active, the AG doesn’t do anything about workers’ rights, the state maybe has passed laws preempting cities or localities from taking action, but if you have an elected DA who’s bringing wage theft cases under robbery or bringing worker exploitation cases, that’s a way to have some really impactful government intervention on behalf of workers, highly visible, really impactful, a lot of deterrence even in a hostile territory. I think that that’s something that’s like a worker hostile territory is what I mean. I think that’s something that has real potential in those states that have preemption.
Nick Hanauer:
You don’t happen to know if wage theft is a felony in Washington State, do you?
Terri Gerstein:
I don’t know offhand. I would have to look it up, but I know there’s-
Nick Hanauer:
Well, I definitely know someone who will know, so don’t worry.
Goldy:
If it isn’t, Nick, I want to make it a felony swindle-
Nick Hanauer:
Yeah, I love that. I love that.
Terri Gerstein:
Isn’t that great?
Goldy:
… because I want to see people convicted of felony swindles.
Nick Hanauer:
Yeah.
Terri Gerstein:
Right.
Nick Hanauer:
Yeah. Well, just a couple of final questions, this has been a fantastic conversation, first, we always ask a benevolent dictator question which is, if you were in charge and could just do anything, what would you do?
Terri Gerstein:
If I’m a benevolent dictator, one thing I would do is I would pass the PRO Act which would make it easier for workers to form and join unions because of those reasons I talked about at the outset, that there’s fewer violations if you have higher union density. It’s easier for workers to complain about violations if they have a union and all of the other benefits that unions bring to labor equity and enforcement resources and policies. I would expand the Supreme Court. I mean, I guess, if I’m a benevolent dictator, maybe I am the Supreme Court, so I would not expand me, but assuming that there is a Supreme Court, I would expand the Supreme Court.
I guess, also, if my benevolent dictator powers are not entirely all-encompassing and I just have to stick more narrowly to the subject of our conversation today, I would want corporate and employer legal violations of all kinds to just be taken seriously through more public resources, stronger laws and more enforcement so we would have greater compliance and fairness in the workplace. That would include, yes, DAs taking this on, and prosecutors, but also more resources for civil enforcement, stronger laws, getting rid of forced arbitration and just creating more ways to ensure that employers don’t have impunity in the workplace.
Nick Hanauer:
That’s great. One final question, why do you do this work?
Terri Gerstein:
Well, I’ve had a commitment to social justice and workers’ rights that goes way back, but, in terms of why it is manifesting right now in this particular form, I think relates to what I said earlier, that I see so much untapped potential in government and especially in state and local government to have a huge impact on workers’ lives and on addressing the power disparity between employers and workers. That power disparity, it has such an impact on people’s lives. People struggle to afford their lives. They can’t spend time with their kids because they have such long hours or they’re having two jobs. People are under so much stress. Government has real power. Finding ways to plant allies within government, not plant allies, but trying to find ways to get government to really leverage its power on behalf of working people I think is something that can make a really big difference in people’s lives.
Nick Hanauer:
Terri, thank you so much for being with us today. It was really fascinating, and thanks for your work.
Terri Gerstein:
Thank you. Thank you so much for inviting me to be on the show. I’m a big fan of the podcast, and this has just been a really fun conversation.
Goldy:
Nick, I’m just shocked that there’s gambling going on in our casino or wage theft going on in our neoliberal economy. How about you?
Nick Hanauer:
Yeah. Yeah. No, I’m not shocked. The thing, Goldy, is that this is a podcast focused on economics, and this seemed like an episode devoted to law or justice or fairness, but I just want to remind viewers that our view of economic cause-and-effect is very, very clear. When workers are paid more money, businesses have more customers and hire more workers. The thriving middle class causes both economic growth and a stable and secure democracy. You cannot have those things if you have rampant wage theft. The number of people kick around is something like 50 billion. It’s five times as much as property crime. An extra $50 billion in workers’ pockets would make an enormous difference both for those workers, but, equally, to the broader economy, which is the point of economic policymaking.
I just think it’s crucial that we find ways to create dramatic disincentives for businesses to mistreat workers. I mean, of course, it is possible to make a mistake. Clerical errors are possible. We don’t want to prosecute people for inadvertent mistakes, but it is really clear that there are a ton of businesses out there that actively seek to steal money from workers, and they should go to jail just like the person who steals your TV. It should be no different.
Goldy:
One of the reasons, Nick, that we have to bring the law into this, and this is something that Terri brought up near the end, is the immense power disparity between workers and their employers. This is economics, or at least it should be. It goes all the way back to Adam Smith. He recognized this in The Wealth of Nations. Unfortunately, modern, neoclassical, orthodox economics just assumes power out of the equation, that somehow the market will address this, that that power does not play a role, that workers are always paid exactly what they’re worth, their marginal utility, and so if you have one company cheating workers out of wages, well, the employees will just go to the other companies-
Nick Hanauer:
Yeah, but this is not true, of course.
Goldy:
… and this will all sort itself out in the end and you don’t need to get the law involved, and then, of course, we all know that that is… I don’t know. What’s the technical word for it in economics?
Nick Hanauer:
Bullshit.
Goldy:
Bull shit. That’s the word, Nick.
Nick Hanauer:
Yeah. Absolutely. Well, anyway, what an interesting conversation and what a consequential thing to devote your working life to, so good for Terri.
Goldy:
Absolutely. If you want to read more from Terri, we will, of course, provide links in the show notes.
Speaker 7:
Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate and review us wherever you get your podcasts. Find us on Twitter and Facebook at Civic Action and Nick Hanauer. Follow our writing on Medium at Civic Skunk Works and peek behind the podcast scenes on Instagram at pitchforkeconomics. As always, from our team at Civic Ventures, thanks for listening. See you next week.