Truth, not Outrage

Retail Theft Dwarfs Wage Theft

Truth

A growing claim by employee law litigators and on social media is that wage theft is the largest form of theft in the United States. Often it is said that wage theft “dwarfs” any other form of theft, that it is three times larger than other types of theft combined, or that it is an order of magnitude larger than retail theft. Wage theft is a serious problem, but these are all false claims.

For those who are not familiar with what wage theft is, it is the illegal withholding of wages or the denial of benefits that are rightfully owed to an employee. The primary form of wage theft is failing to pay minimum wage to an employee. Other forms of wage theft include failing to pay overtime, forcing employees to work off the clock, denying breaks, and misclassifying employees as independent contractors. These all break the law and deny workers the pay they are owed.

Theft in general is the illegal taking of the property of another with intent to deprive the owner thereof. By its nature as an illegal activity, getting accurate statistics on theft of wages or other types is difficult. However, researchers do their best and can provide us with a good idea of the approximate size of different types of theft.

Wage Theft

The primary think tank researching wage theft is the Economic Policy Institute (EPI). While it is admittedly quite linked with the labor and union movements, it is nevertheless a reputable organization and its figures should be fairly trustworthy.

Two of EPI’s researchers, David Cooper and Teresa Kroeger, estimated that wage theft from minimum wage violations from 2013–2015 amounted to around $15 billion per year.¹ They found that in the ten most-populous states, approximately 4% of minimum-wage workers were paid less than the minimum wage, with an average underpayment of $64 per week. This study was conducted by analyzing wage data collected by the federal government, which is extremely comprehensive and widely recognized as the best publicly available source of hourly wage information.

The other forms of wage theft are harder to estimate. The only study that seems to have tried to assess them was funded by UCLA and took place in 2008 by surveying 4,387 workers across three major US cities via chain-referral sampling.² They estimated the average victim of wage theft lost $51 per week, with overtime violations being the most common offense. The EPI has used this study to estimate that wage theft costs workers $50 billion per year. However, this study seems to have captured a very non-representative sample. It measured a 25.9% minimum wage violation rate, which is more than six times higher than the rate calculated by EPI itself. It is quite possible that the chain-referral sampling method used in this study led to a sample that was biased towards people who had experienced wage theft, as 68% of respondents reported having experienced wage theft in the past week. Perhaps the most useful takeaway from this study is its ratio of violations. It found that 58% of wage theft was due to minimum wage violations, 22% was due to overtime violations, 10% to rest break violations, and 8% to off-the-clock violations. Even if victims were overrepresented in this study, it is likely that the ratios of violations are somewhat accurate.

If we attempt to harmonize these two studies, we can get a decent estimate of annual overall wage theft:

Other Theft

Wage theft is only a small slice of overall theft however. In addition to labor law violations, billions are also stolen from Americans via fraud, identity theft, and more overt methods such as burglary, robbery, shoplifting, pick-pocketing, and car theft. The FBI keeps detailed statistics on these types of theft when they are reported to law enforcement. However, the FBI does not keep statistics on wage theft nor does it make estimation as to the value of unreported theft, so its statistics are not directly very useful for our purposes. In 2019, the estimated reported theft costs of different types of theft were as follows:³⁴

However, this again only reports the value of theft that was reported to police. The Bureau of Justice Statistics estimates that under 31% of theft is reported to police, so the true value of theft is likely much higher than the FBI’s statistics indicate.⁵ Total theft can be more accurately estimated by looking at surveys of victims of theft. The Bureau of Justice Statistics conducts an annual survey of victims of crime, including theft, called the National Crime Victimization Survey, and various insurance, consulting, and advocacy groups conduct similar surveys, which can be used to estimate the true value of theft in the United States.

Motor Vehicle Theft

The most valuable item commonly stolen from people is their cars. They are mobile by their very nature and often parked outside, so they are very attractive targets for thieves. The National Insurance Crime Bureau estimates that motor vehicle theft cost Americans $8.9 billion in 2022. This is less than total wage theft, but it is still one of the largest forms of theft in the United States.

Identity Theft

Identity theft is one of the most booming types of theft in the United States. Due to the increasingly remote and digital natures of finance and commerce, it is easier than ever for criminals to acquire and misuse people’s personal information to steal their money.

The Bureau of Justice Statistics estimates that in 2021 23.9 million people were victims of identity theft, with a total loss of $16.4 billion.⁶ Javelin Strategy & Research estimated it higher, claiming that 15 million consumers lost $24 billion to direct identity fraud and 27 million people lost $28 billion in related scams.⁷ It is unclear the exact level, but this form of theft is definitely comparable to wage theft.

On scams specifically, the Federal Trade Commission estimates that Americans lost $8.8 billion in reported scams in 2022.⁸ Exactly how you delineate between scams and identity theft is unclear, but fraud in general is a huge problem in the United States.

Retail Theft

To get a sense of the scale of retail theft, the National Retail Federation conducts an annual survey of retailers to estimate the value of theft in their stores. Overall retail theft cost retailers almost $73 billion in 2022.⁹ This is almost three times the value of wage theft is by far the largest form of theft in the United States. Theft caused almost twice as much loss as all other forms of shrink—food expiration, breakage, administrative errors, unknown causes, etc.—combined.

Breaking this sum down, 55% of retail theft has been external thieves, and 45% has been employee theft. This means that retail employees alone steal over $32 billion from their employers. Even if we treat each kind of theft separately, both forms of retail theft are larger than wage theft. While wage theft is a horrible crime against workers, retail theft also directly causes higher costs for consumers and arguably hurts workers even more than wage theft does. Regardless of their relative harms, retail theft certainly amounts to more money being stolen than wage theft does.