Every single Californian is harmed by Underground Economy activity and wage theft. Workers, business owners, taxpayers and everyday citizens are feeling the pinch via strained public budgets and under-resourced public services.
Unscrupulous businesses that pay their workers less than they are owed and skirt tax obligations operate on a business model of cheating and cutting corners. This puts millions of legitimate businesses at a competitive disadvantage when it comes to winning bids and customers, and ultimately leads to downsizing and layoffs.
By creating downward pressure on wages, “wage theft” is actively adding to the ranks of our state’s working poor and increases reliance on taxpayer subsidized public assistance programs.
At an estimated cost of $8.5 billion in uncollected tax revenue, wage theft also imposes increased financial burdens on every California taxpayer. By taking tangible steps to combat wage theft we can reduce this tax burden on those who play by the rules, while producing more revenue for the things that California needs—better schools, updated infrastructure, and public safety.
“Routinely losing $8.5 billion or more annually has significant state budget consequences. Overall, $8.5 billion in lost revenue represents roughly 80 percent of the state’s corrections budget, or almost 60 percent of the General Fund allocations for California’s 10 University of California campuses, 23 California State University campuses and 112 community college campuses.”
– “Leveling the Playing Field: Put California’s Underground Economy Out of Business,” Little Hoover Commission, March 2015