Frank Manzo IV is the Policy Director of the Illinois Economic Policy Institute (ILEPI). Visit ILEPI at www.illinoisepi.org or follow ILEPI on Twitter @illinoisEPI.

Analysis of new data from the Current Population Survey (conducted jointly by the U.S. Bureau of Labor Statistics and the U.S. Census Bureau) reveals that 4.8 percent of the Illinois workforce earns less than $8.25 an hour, the legal minimum wage for workers aged 18 years or older in firms with 4 or more employees. In total, an estimated 264,508 workers earned less than the minimum wage in 2014. Among sub-minimum wage earners (SMWEs), hourly pay averages just $6.66, or $1.59 per hour below the minimum wage floor. This translates into an economic loss of $1,654 over the year for part-time employees who worked 20 hours per week in 2014.

While many of these workers are under 18 years old or are employed by small businesses excluded from the minimum wage law, many others are the victims of wage theft. A 2009 study by researchers at the National Employment Law Project, the University of Illinois at Chicago, Cornell University, and the University of California – Los Angeles found that 26 percent of low-wage, “front-line” workers were paid less than the legally-required minimum wage. The highest violation rates occurred in apparel and textile manufacturing, private households, and personal and repair services. Similarly, in a survey of 57 car washes in the City of Chicago, the University of Illinois at Urbana-Champaign found that 76 percent of hand car wash workers earned below the state’s minimum wage and 13 percent earned less than $2 per hour.

Minimum wage theft occurs for many reasons. First, there could be information problems in that employers may not realize that their practices are depriving workers of owed income or that they have misclassified workers as temporary or contingent workers. Second, tipped employees may not be compensated by their employer enough to close the minimum wage gap when the tips fall short. Third, business practices that elevate short-term profits above long-term profitability put downward pressures on wages. Fourth, economically inefficient social issues such as racial, gender, sexual orientation, and religious discrimination could also be factors. Continue reading “Over 250,000 Illinois Workers Earn Less than the Minimum Wage”