Just Sociology

Breaking Down Minimum Wage Underpayment and Its Inadequate Punishments

Minimum wage underpayment is a growing issue in current society where low-income workers are often denied their fair wages. Such practice reflects exploitation and violates basic human rights, as well as decreases the standard of living for affected workers.

This article focuses on two main topics: (1) minimum wage underpayment and (2) punishment for minimum wage underpayment. Under each topic, there are two subtopics that provide a more nuanced understanding of the overall issue.

1. Main Topic: Minimum Wage Underpayment

Statistics on Minimum Wage Underpayment

Minimum wage underpayment is a prevalent issue that affects millions of workers worldwide. In fact, recent studies show that approximately 22% of workers in the US alone face minimum wage underpayment (Marx, 2017).

Among the top industries that underpay their workers are retail and hospitality, with companies such as Wagamama’s and TGI Friday’s experiencing accusations of underpayment. Additionally, it is found that criminal employers who violate labor laws often benefit from the underpayment of their workers, as it secures profits for their businesses.

Fortunately, the law provides a way for underpaid workers to demand back pay from their employers. For instance, in the UK, the government demands payment of back pay for any workers that were paid below minimum wage.

Furthermore, criminal employers face hefty fines to deter future practices of wage fraud (CIPD, 2021).

Offenders and Victims of Minimum Wage Underpayment

Minimum wage underpayment is a crime that affects both the offenders and victims. Offenders typically exploit their workers to increase their profits, while victims are frequently people who cannot find other work except low-paying jobs.

In the case of retail and hospitality companies, minimum wage underpayment can destitute employers and can cause permanent economic hardship. Therefore, it is crucial that minimum wage underpayment cases revolve around victim-centeredness.

That is, the court’s decisions should take into account the significant impact of minimum wage underpayment on the victims’ lives. By emphasizing victim-centeredness and awareness of the harm caused by minimum wage underpayment, court cases can convey a powerful message to the offenders and deter future illegal practices.

2. Main Topic: Punishment for Minimum Wage Underpayment

Government’s Power to Fine Offenders

Governments have the power to fine employers up to 200% of the wage owed to underpaid workers, hence, ensuring that offenders will pay a substantial fine and bear the costs of committing such acts.

The UK government, for instance, recently imposed a 6 million fine on a warehouse company for underpayment (BBC, 2018). By imposing such fines, the government intends to deter wage fraud and other criminal practices.

More importantly, the money collected from fines can be used by governments to fund social programs aimed at poverty alleviation, giving greater importance to the victim-centered and community-building aspects of punishment.

Lack of Physical Deterrent and Soft Punishment

Although the government has the power to fine offenders, it is often insufficient to impose deterrence. While fines help address the monetary losses of the victim, they fail to confront the root issues underlying wage fraud.

Moreover, fines do not pose any physical consequences or create an immediate sense of regret or fear for the offenders, thus recidivism is highly likely. Marxist theory highlights the power dynamic between employers and employees, and how the exploitation of workers while making profits for employers is an inherent characteristic of capitalist societies.

Therefore, punishing offenders is critical to protect the most vulnerable workers in the labor force whilst changing the exploitative conditions of capitalism. However, when the punishment is limited to financial fines, powerful actors are likely to continue practice wage fraud in the expectation that the monetary benefits outweigh the risks associated.

Therefore, expanding the current mechanism of punishment may be necessary to tackle wage fraud effectively. Jail sentences may create an immediate emotional, physical, and social consequence of the offense.

Thus, the jail sentence may serve as the physical deterrent that fines cannot provide. Furthermore, non-monetary penalties that utilize social stigma (e.g., being banned from re-entering the related industry) may have a greater punitive effect.


In conclusion, minimum wage underpayment is a crucial issue that affects many workers around the world. It is incumbent on us to develop measures that can deter employers from committing offenses, and provide protections for its victims.

Whilst fines imposed on offenders are effective in some regards, their impact is limited. By expanding the range of punishment to better counteract the exploitative nature of capitalism, we may be able to bring about systemic change to this issue.

Governments, academics, and the private sector must take active measures to confront this challenging issue and enable workers to receive wages that represent their value. In conclusion, minimum wage underpayment is a complex issue that affects millions of workers worldwide, and punishment for offenders of minimum wage underpayment often falls short in terms of creating an effective deterrent effect.

Nevertheless, this article provides some practical suggestions for addressing this issue, such as emphasizing victim-centeredness, expanding the current mechanism of punishment, and implementing social stigma measures. It is crucial to provide more effective and efficient measures to detect, punish and prevent minimum wage underpayment so that workers can earn a fair wage and live without financial struggles.


1. What is minimum wage underpayment?

Answer: Minimum wage underpayment refers to the act of an employer paying their employees less than the minimum amount of pay that is set by government regulations. 2.

Who are the victims of minimum wage underpayment? Answer: The victims of minimum wage underpayment are low-income workers, often working in the retail and hospitality industries, who are denied their fair wages.

3. How are offenders of minimum wage underpayment punished?

Answer: Offenders of minimum wage underpayment can be fined up to 200% of the wage owed to underpaid workers, however, fines may not always serve as an effective deterrent. 4.

What is victim-centeredness in minimum wage underpayment cases? Answer: Victim-centeredness in minimum wage underpayment cases involves prioritizing the needs and rights of the victim, considering how the offender’s actions have impacted the victim’s life.

5. How can we address minimum wage underpayment effectively?

Answer: Addressing minimum wage underpayment effectively requires emphasizing victim-centeredness, expanding the current mechanism of punishment, and implementing social stigma measures.

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