• Clavier - crédit Sergi Kabrera - Unsplash

    Call for papers

    RI/IR invites you to submit manuscripts for the forthcoming thematic issue “The Socio-Environmental Restructuring of Work and Employment: Processes, Effects and Governance”. Deadline for submissions: June 15th, 2025.

  • ordinateur montrant google - crédit firmbee . com - unsplash

    Google Top 50

    Relations Industrielles/Industrial Relations is now #50 on Google Scholar’s top 100 french journals list! 

  • ordinateur sur une table - crédit photo Jakub_Zerdzicki - Unsplash

    Call for papers

    RI/IR invites you to submit manuscripts for the forthcoming thematic issue "What are the repercussions of labour/skills shortages and scarcity on industrial relations and human resource management?". Deadline for submissions : February 28th, 2025

  • cellulaire montrant le logo de la revue

    Volume 79-1 is online!

    The latest issue (79-1) is now available in open access.

  • Campus Hiver
  • 4 éditeurs associés

    New associate editors

    Welcome to our new associate editors : Professor Tania Saba, Professor Ernesto Noronha, Professor Ann Frost and Professor Jean-Étienne Joullié!

     

Debunking Lien Myths: Empirical Evidence for an Essential Tool in the Fight against Wage Theft

Debunking Lien Myths: Empirical Evidence for an Essential Tool in the Fight against Wage Theft

Justin McBride and Laura Adler

Volume : 77-1 (2022)

Abstract

Wage lien laws have immense potential to help workers collect owed wages. Because liens can secure rights to property before full adjudication, workers can rest assured that real assets will exist should they prevail and scofflaw employers cannot easily hide assets from collections. Despite the proven usefulness of wage lien laws, opponents frequently argue that broad lien regimes would restrict credit.

We use a difference in differences regression analysis to test this argument, using data from the US Small Business Administration 7(a) loan program. We look to two multistate metropolitan areas in the United States with divided wage lien regimes – Chicago and Washington DC. In each case, wage lien laws are permitted in one state (Wisconsin and Maryland, respectively) and not allowed in others (Illinois and Indiana for Chicago, Virginia for Washington).

We test the argument against wage liens through regression analysis, looking at gross approvals and interest rates as a reflection of risk. We also aggregate observations by 4-digit NAICS code, by lending institution, and by ZIP postal code and reran regression analyses. The wage lien law treatment did not lower the gross approval amount of 7(a) loans in either market, and did not increase the interest rate faced by borrowers. Indeed, results, while mostly statistically insignificant, in some cases showed the opposite effect. Although these tests do not definitively prove that wage lien laws do not constrict credit flows to small businesses, they provide absolutely no evidence to support such an argument either. The findings thus support the position of advocates supporting wage lien laws as a common-sense tool in the arsenal against wage theft, while casting substantial doubt on oppositional claims against wage liens.

Keywords: wage liens, wage theft, small business loans, difference-in-differences analysis

You can access the free pdf file here!

Photo by Kenny Eliason on Unsplash

Read the full article