Twin Cities Workers Lose $90 Million a Year to Minimum Wage Theft
Tuesday, Nov 14, 2023

PISCATAWAY, N.J. – Minneapolis is far ahead of most American cities with its strategic approach to labor standards enforcement, using proactive investigations and a co-enforcement model in which the city and community organizations partner to train and educate workers, identify labor rights violations, and move more employers toward compliance.

But a new research study reveals that while the program has been effective, the minimum wage violations it has uncovered are just the tip of the iceberg. The Workplace Justice Lab@Rutgers University finds that an average of 32,000 workers in the Twin Cities region are paid below the minimum wage each year, costing them an estimated $90 million in lost wages.

“The City of Minneapolis is a national leader in its commitment to robust, effective enforcement,” said Professor Janice Fine, director of the Workplace Justice Lab@Rutgers University. “Unfortunately, we can see from the underlying violation rates that wage theft remains a pervasive issue. Our findings point to the urgent need for more investigators and increased support for strong co-enforcement partnerships.”

Where most cities rely exclusively on complaint-based enforcement, the Minneapolis Labor Standards Enforcement Division (LSED) also uses proactive, directed investigations to check for compliance in high-violation industries, and partners with local community organizations on worker outreach, training and education, and identifying and remedying violations.

However, LSED employs just three investigators to serve 250,000 minimum wage workers—a ratio of one investigator to every 83,000 workers. The mayor’s proposed 2024 budget includes funding for one additional investigator, but the Rutgers report suggests that expanding staffing even further could make the city’s enforcement program more effective. 

Researchers Jake Barnes, Daniel Galvin, Jenn Round, and Janice Fine analyzed federal data on the Minneapolis-St. Paul metropolitan statistical area (excluding Wisconsin) and compared their findings to LSED’s own data to see what is and isn’t working. They found:

  • Minimum wage violations have cost workers an estimated $886 million in the Twin Cities region over the last 10 years. That’s an average of nearly $90 million per year.
  • An average of 32,000 low-wage workers are illegally paid below the minimum wage every year, costing each worker about $2,700 annually.
  • The overwhelming majority of violations go unreported
  • Between 2017 and 2022, LSED received only 79 minimum wage complaints despite thousands of violations occurring.
  • LSED led 43 proactive, directed investigations of minimum wage violations, resulting in settlements affecting more than 878 minimum wage workers, during that five-year span.
  • The agency successfully prioritized the industries with the highest violation rates.
  • Black workers, immigrants, people without a high school diploma, and part-time workers – particularly women – are significantly more likely to be victims of wage theft.
  • The food services industry has the highest violation rate, 11.3%, affecting fast food workers, servers, cooks, food prep workers, bartenders, and dishwashers.

The report recommends that the City of Minneapolis devote additional resources to enforcement by hiring more inspectors and increasing support for co-enforcement partnerships with community organizations. Total employment is expected to grow by 2030 in seven of the eight industries with the highest violation rates, highlighting the urgent need for more resources.

“Minneapolis has been a leader in setting labor standards, and we're proud of the work we've done to lead on strategic enforcement strategies,” said Brian Walsh, director of the Labor Standards Enforcement Division (LSED) in Minneapolis. “Wage theft hurts families, businesses, and the economy, and we are committed to continuing to expand our work and targeting high violation industries to ensure all workers are paid what they're owed.”

“When workers experience wage theft, it impacts our entire family and our daily life,” said Douglas Guerra, a leader and board member at CTUL, one of the City’s co-enforcement partners. “Because of the tools I learned at CTUL, I was able to recover wages that were stolen from me at work—not just once, but several times. And, what I’ve learned at CTUL I have been able to share with other workers. The co-enforcement program guarantees that workers have access to essential information about our rights at work, and are able to speak out against the violations that are happening to us on a daily basis.”

“This report confirms what we hear from our members every day: wage theft continues to harm our families and livelihoods, and the large majority of violations remain unreported,” said Veronica Mendez Moore, co-director of CTUL. “The co-enforcement model we have built with the City is making a big difference. In partnership with the City, we’ve trained thousands of workers and recovered over $1.6 million dollars in stolen wages. We urge the Mayor and Council to continue to invest in workers and increase funding for this vital program in 2024 and beyond.”

“It's easy to pat ourselves on the back as legislators when we pass strong protections for workers, but getting good legislation across the finish line is only the start,” said Elliot Payne, Minneapolis Council Member representing Ward 1. “If we don't fund enforcement of worker protections, we aren't taking this problem seriously.”

A pilot project led by LSED, the Workplace Justice Lab@Rutgers University, and Main Street Alliance is providing critical back-office systems to small business owners in Minneapolis. The program subsidizes payroll and bookkeeping services for participating businesses, while creating tracking systems that enable labor law compliance. 

Press Contacts

Steve Flamisch
Rutgers School of Management and Labor Relations
848.252.9011 (cell)

About Us

The Rutgers School of Management and Labor Relations (SMLR) is the world’s leading source of expertise on managing and representing workers, designing effective organizations, and building strong employment relationships. 

The Workplace Justice Lab@Rutgers University (wjl@RU) exists to address economic inequality through supporting and strengthening grassroots organizing and democratic governance. We do this through building dynamic communities of learning and practice, carrying out cutting edge research, and offering specialized training and in-depth one-on-one consultations.