INSTITUTE FOR POLICY RESEARCH

Wage Theft Lifts $44 Million Out of L.A. Fast Food Workers’ Pockets Each Year

New report highlights a solution—informing workers about their rights

While the minimum wage for fast food workers in Los Angeles has risen to $20 per hour, instances of wage theft—when employers break the law by not paying their workers for their full hours and benefits—have tripled since 2019. Currently, more than 12,000 L.A. fast food workers are victims of wage theft, losing more than $44 million in combined wages per year.

A first-of-its-kind report by Northwestern and Rutgers researchers uses government survey data to examine wage theft and quantify how much workers in Greater L.A. lost. It also points to a possible solution for reducing wage theft—educating workers about their rights in the workplace—the aim of a measure under consideration by the L.A. City Council.

“When low-wage workers are underpaid by even a small percentage of their income, they face major hardships such as being unable to pay for rent, afford childcare, or put food on the table,” said IPR political scientist Daniel Galvin, the report’s lead author and director of the Workplace Justice Lab @ Northwestern University. “It’s more important than ever that fast food workers know their rights and how to exercise them.”

In their study, Galvin and Jake Barnes of the Workplace Justice Lab @ Rutgers University compare how much fast food workers made to those working in retail, restaurants, healthcare, and transportation in Greater L.A. between 2009 and 2024. The hourly wages of Angeleno fast food workers rose the most (96%), but still lag behind what workers make in the other sectors.

The report also underscores that violations rose more sharply in the fast food industry than in the other service sectors. Wage theft tripled for fast food workers rising from 3% in 2009 to 25% by 2024, affecting one in four workers—and the problem is likely more widespread.

“We expect that more workers actually experience wage than what we find in our study due to factors like data limitations and people being afraid to speak up when they are underpaid,” Galvin said.

 Galvin explains that minimum wage violations are just one form of wage theft—others include not getting paid for overtime work, being wrongly classified as an independent contractor, or having tips stolen.

“Other studies have shown that the cost of wage theft dwarfs other forms of theft, including burglaries, larceny, and auto theft,” Galvin added.

As to the puzzle of why as the minimum wage rose, wage theft did, too, Galvin offers some possible reasons. He points to several factors—low rates of unionization and a high-turnover workforce with many immigrants and younger workers who might not know their rights or fear retaliation for speaking up. He also calls out the fast food franchising model, which decentralizes responsibility for complying with labor laws, drives down wages, and worsens working conditions.

Galvin also notes that while some employers need time to adjust to the increased minimum wage, others simply refuse to comply with it. And enforcement agencies lack the resources and capacity to fully enforce it.

A recent survey reveals why workers might not come forward to complain about wage theft. It shows that 88% of California’s fast food workers do not fully understand their basic rights in the workplace—or what they need to do if they are violated.

Currently, the L.A. City Council has a measure before it, the Fast Food Fair Work Ordinance, that would mandate “know-your-rights’” trainings for the city’s fast food workforce. It is under review in the Council’s Economic Development Committee.

“Know-your-rights trainings for fast food workers would play an important role in ensuring that Angelenos are both aware of their rights at work and how to exercise them,” said Jake Barnes, a research program manager at the Workplace Justice Lab @ Rutgers University, who co-authored the report.

Read the report.

Daniel Galvin is a professor of political science and IPR fellow. He directs the Workplace Justice Lab @ Northwestern, housed in the University’s Institute for Policy Research. The lab is part of a multi-institutional research partnership and collaboration that includes Workplace Justice Lab @ Rutgers University and Pilipino Workers Center of Southern California.

Photo credit: Adobe Stock

Published: February 18, 2025.