Association for Public Policy Analysis & Management

The Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) is interested in understanding the potential deterrent effects—termed ripple effects—that its investigations have on subsequent investigations of employers in the same industry and local area. As a complement to prior research on the fast food and hotel and motel industries, DOL contracted with IMPAQ International, LLC to conduct a similar analysis of the potential ripple effects in two other industries. Using WHD administrative data on investigations concluded between fiscal years (FY) 2005 and the third quarter of FY 2013, this report examines ripple effects in these industries by analyzing the relationships between employer characteristics, compliance outcomes, and the number of past WHD investigations in a local area. We find evidence of ripple effects in the two industries on total back wages due, number of employees paid in violation, total back wages due per employee paid in violation, and incidence of non-compliance, both for a national sample of investigations and for a sample related to local initiatives conducted by select WHD District Offices.