About 32,000 Twin Cities workers are underpaid. Minneapolis is addressing the problem from a new angle

CATHY WURZER: Each year, approximately 32,000 workers in the greater Twin Cities metro area are paid less than the minimum wage in their city. And the losses average out to about $2,700 per worker. Now, that's according to a recent study from the Workplace Justice Lab at Rutgers, but the researchers say the city of Minneapolis is doing something right, describing it as the only city that directly investigates wage violations instead of waiting for complaints to come in.

Brian Walsh leads that work for the city of Minneapolis and he is on the line. Brian, welcome to the program. Thanks for your time.

BRIAN WALSH: Cathy, thank you so much for having me.

CATHY WURZER: A restaurant and service workers and folks doing direct care work evidently those most commonly paid under the minimum wage laws. Does this line up with what you understand?

BRIAN WALSH: Yeah. Yeah. And unfortunately, a lot of what we see is where-- sort of labor-intensive work and lower paid industries is where we see a lot of these violations. So sort of think all sorts of different cooking, cleaning, constructing, buildings, things like that is where we see the most-- I guess the highest prevalence and some of the most egregious types of violations.

CATHY WURZER: Why do we think that's the case?

BRIAN WALSH: Yeah. Well, so in a general sense, the labor market itself is what really regulates a lot of the treatment of workers. So if you or I, for example, are owed money by our employer, we often are able to just march into the boss's office or call someone in HR, et cetera. But the lower the cost of replacing me or the worker, the lower the cost to the employer to replace a worker, the less protected by the labor market itself that that worker becomes.

CATHY WURZER: OK. So I'm wondering is this something happening with the employer? Are they deliberately withholding or not paying what they're supposed to pay? Do you have a sense of what drives employers to pay less than what they're legally supposed to get?

BRIAN WALSH: Yeah. Yeah. So we see all sorts of different sort of types of situations that fall under the umbrella of wage theft. A lot of them in smaller businesses are just a lack of capacity in the sort of back office systems to run the business and maybe sometimes the ball just gets dropped or there's just not a sophisticated enough payroll system.

But on the other end of the spectrum, you have things like labor exploitation or even human trafficking. And oftentimes in industries where there's different layers of subcontracting, commercial cleaning or construction are couple, where there's really-- there's increasing pressure to keep costs as low as possible. And some times corners get cut or there's even sort of an intentional as a business model is paying workers less than they're legally entitled to.

CATHY WURZER: So I'm curious, is this problem getting worse post-pandemic?

BRIAN WALSH: Yeah. So trends are hard to follow, but it's not-- I guess I would say anecdotally, yeah. Yeah. It rises and falls with the labor market as well. Again, where labors are-- or I'm sorry, where workers are scarce, sometimes workers are more empowered and maybe you'll see fewer complaints and less exploitation.

So at this moment in time, I wouldn't say it's getting worse, I would say it's always been a really, really serious problem across the entire country, and including here in the in the Twin Cities where you mentioned it's tens of thousands of workers owed tens of millions of dollars, and that's just in the Twin Cities alone.

CATHY WURZER: Now, I know you're working with Rutgers on this pilot project to help small businesses in a sense get their act together. What are you planning to do?

BRIAN WALSH: Yeah. So we're working with about 20 businesses that we have now, really, really small businesses, and we're helping to sort of figure out how do we help them achieve compliance. And that's where we know that capacity, since the capacity is the real issue there, where you might have a small business owner juggling many different-- keeping all sorts of different balls in the air and spinning a whole lot of plates.

And oftentimes they're an expert and passionate about the good or service that drove them into business in the first place, but don't necessarily have a background in actual business administration and the systems that keep a business up and running. So we're helping subsidize some of those things like accounting, payroll provider, time keeping for employees, et cetera.

CATHY WURZER: So is this working? What are some of the-- what are some of the early results of this?

BRIAN WALSH: Yeah. Well, so far, it is a pilot project that we're working with just a couple of dozen, not even quite a couple dozen small businesses, but definitely for those businesses directly affected that we're working directly with, we're seeing huge changes. We're seeing just a much more-- a much better understanding of both what the rules are and, for example, what is an employee versus an independent contractor, but also giving them the tools to actually combat the sort of the capacity issue.

So yeah, we're seeing dramatic differences in those businesses. And then in the larger scope of our work, we are extremely intentional to figure out where are the industries, where are the places, not just that we're sitting back and waiting to receive complaints because by definition, the most vulnerable workers are also the least likely to file complaints.

So we're being really strategic and proactive about going out there, talking to workers, working with community partners to look for the violations and sort of spend our extremely scarce enforcement resources in the places that they're needed most.

CATHY WURZER: So you're trying to get ahead of the problem?

BRIAN WALSH: Yeah. Yeah. That's right. It's a huge-- it's a huge problem as the data reveals. Generally, the general public isn't really aware of the problem, the extent of the problem. And it goes wildly underreported. There are many, many, many, many more violations than there are those reported. So the extent of the problem is more than just one small-- one small government agency can truly end, but we want to make-- we want to make the biggest difference as we possibly can.

CATHY WURZER: Wondering about working with other cities, you know, Saint Paul, Bloomington, other suburbs, I mean, because this problem clearly is metro-wide. How are you doing on that?

BRIAN WALSH: Yeah. The problem really is countrywide. And that sort of cross-jurisdictional collaboration is really important and can be very valuable. I meet regularly with, you know, our friends over there at the city of Saint Paul, the city of Bloomington, the Minnesota Department of Labor, and the US Department of Labor.

We do meet regularly, share information, figure out where we can work together to make a bigger than the sum of our parts really. And also talk to cities like Seattle, San Francisco, Denver, Chicago. Meet periodically with them to share best practices and figure out how we can do our work even better.

CATHY WURZER: Sounds like you're doing pretty well because the report recommends the city hire another investigator to help with this work and you've got what? Three right now. Is that right?

BRIAN WALSH: Yeah. Just in the city of Minneapolis, we have three investigators. That's a proportion of 1 investigator for every about 83,000 workers. Obviously, that's too much ground. We can't be in all places all the time. The mayor and city council recommended budget for next year does add an additional investigator to our team. And we appreciate that vote of confidence and that investment in protecting workers across the city.

CATHY WURZER: Well, I appreciate hearing about this. Thank you so much, Brian. Best of luck.

BRIAN WALSH: Thank you, Cathy.

CATHY WURZER: Brian Walsh is the director of the Labor Standards Enforcement Division with the city of Minneapolis.