America's Workers Are Out-Stealing America’s Shoplifters

Maybe if retail staff were paid better, stores wouldn't lose $18 billion a year to in-house theft.

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In a couple of weeks, the media will shift its attention to the madness of holiday retail, as if the fate of the American economy rests on how many hours (or days) in advance people started waiting in line to get into a sale at Best Buy. But one thing that might get lost in the coverage of Black Friday stampedes is how much money retailers will lose from shoplifting and theft—at the hands of their own employees.

The Global Retail Barometer, an annual report released late last week, revealed that American retail staff steal a lot more from their employers than actual, dedicated thieves: Employees account for 43 percent of revenues that were lost but shouldn't have been, while shoplifters account for 37 percent. Usually, this takes the form of unsupervised sleight-of-hand at the register—benefiting from purposely canceling transactions that shouldn’t be canceled or issuing unwarranted refunds—and it accounted for about $18 billion in lost retail revenue last year in the U.S.

As MarketWatch noted, the outsize dent left by employees is more or less unique to America. The rate at which U.S. employees steal from their companies is nearly the highest in the world, second only to Argentina’s. Worldwide, retail workers contribute to only 28 percent of revenues lost.

So how might employee theft be reduced? Increasing supervision isn't a guaranteed fix, as it might just engender more of the negative feelings that lead to theft in the first place. Instead, it might help to simply pay employees more: A 2012 study suggests that if retailers pay their employees better than their competitors do, employee theft will mostly disappear. Having a higher disposable income might be part of it, but the study suggested that paying higher wages can create a work culture that's more premised on honesty.

Funnily enough, that’s exactly the opposite of what most employers have been doing. As Vox observed, wage theft on the part of U.S. firms is rampant: Nearly a billion dollars in wages that rightfully belonged to workers were recovered with the help of attorneys, states, and federal agencies in 2012. And if the Economic Policy Institute’s generous estimate that wage theft costs employees $50 billion a year is even close to accurate, employees aren’t the most culpable thieves here.