Economics in the Media…

…in May, I posted this tongue in cheek (and excessively long) rewrite of a New York Times investigative report about the nail salon industry in New York City.

NYT’s original thesis: “Manicurists are routinely underpaid and exploited, and endure
ethnic bias and other abuse, The New York Times has found.”

My thesis in the rewrite: Manicurists are routinely underpaid and exploited, and endure ethnic bias and other abuse, [first generation immigrants working their first job, trained and housed for free by employers, hired despite having no language skills and/or being in the country illegally, able to use the skills learned on the job to build a better life] The New York Times has found.

Well, apparently I’m not the only one who reads The New York Times. Within four days, New York State Gov. Andrew Cuomo introduced “”emergency protections for nail-salon workers,” according to Reason.com.

Reason continued to cover the story, as it first seemed to fade back, thanks in part to Assemblyman Ron Kim (D-District 40), then as evidence of factual errors and misquotes surfaced in July, then as the employees and nail-salon owners alike began openly protesting The New York Times five months after the story was first published.

There whole saga has been very interesting and now Reason has an awesome 10 minute video recapping the last seven months.

NYT Reports: American Dream alive and well in nail salon industry

What if New York Times investigative reports were written without sensationalism, by someone who has taken an economics course and who doesn’t believe government is the answer to everything?

Below I updated this recent story on the nail salon industry in New York City.

The Price of Nice Nails

Manicurists are routinely underpaid and exploited, and endure ethnic bias and other abuse, [first generation immigrants working their first job, trained and housed for free by employers, hired despite having no language skills and/or being in the country illegally, able to use the skills learned on the job to build a better life] The New York Times has found.

By   

The women begin to arrive just before 8 a.m., every day and without fail, until there are thickets of young Asian and Hispanic women on nearly every street corner along the main roads of Flushing, Queens.

As if on cue, cavalcades of battered Ford Econoline vans grumble to the curbs, and the women jump in. It is the start of another workday for legions of New York City’s manicurists, who are hurtled to nail salons across three states. They will not return until late at night, after working 10- to 12-hour shifts, hunched over fingers and toes.

On a morning last May, Jing Ren, a 20-year-old who had recently arrived from China, stood among them for the first time, headed to a job at a salon in a Long Island strip mall. Her hair neat and glasses perpetually askew, she clutched her lunch and a packet of nail tools that manicurists must bring from job to job.

Tucked in her pocket was $100 in carefully folded bills for another expense: the fee the salon owner charges each new employee for her job. The deal was the same as it is for beginning manicurists in almost any salon in the New York area. She would work for no wages, subsisting on meager tips, until her boss decided she was skillful enough to merit a wage. [In exchange for that nominal fee, Ms. Ren would not only receive training as a manicurists, she would also start earning tips immediately and working her way towards a regular salary a few a months down the line. Unlike many other fields such as cosmetology, manicurists do not face prohibitively high barriers to entry and as such have become a first choice for many new arrivals to New York City, many of whom don’t yet speak English or have any easily marketable skills. To become a hair stylist by contrast requires individuals to complete as much as 1,000 hours of schooling costing nearly $10,000 followed by strict state licensing exams. Instead, manicurists learn on the job for a nominal upfront fee and are able to start earning tips right away.]

It would take nearly three months before her boss paid her. Thirty dollars a day. [It was less than three months before she started earning a salary on top of her tips. Thirty dollars a day for the newest workers, those still learning the trade. If she had by chance been able to afford to a go to a cosmetology program in the state, it would be at least two years before she could expect any income at all.]

Once an indulgence reserved for special occasions, manicures have become a grooming staple for women across the economic spectrum. There are now more than 17,000 nail salons in the United States, according to census data. The number of salons in New York City alone has more than tripled over a decade and a half to nearly 2,000 in 2012.

But largely overlooked is the rampant exploitation of those who toil in the industry. [Largely overlooked is the extent to which industry also serves as a stepping stone of opportunity for many new immigrants; especially those who don’t speak English and possess few other formal skills.] The New York Times interviewed more than 150 nail salon workers and owners, in four languages, and found that a vast majority of workers are paid below minimum wage; sometimes they are not even paid. Workers endure all manner of humiliation, including having their tips docked as punishment for minor transgressions, constant video monitoring by owners, even physical abuse. Employers are rarely punished for labor and other violations. [Workers often face difficult conditions, but most are happy just to have a job. With high minimum wages in other sectors, new immigrants often lose out on job opportunities to people with higher productivity. Even worse, high minimum wages give some employers the luxury of indulging their prejudices, refusing to hire workers from particular ethnic groups. Not so in the world of manicuring, where people have been left alone by government to bargain for themselves. The work is difficult, the hours are long, and the pay would be considered meager to many Americans but workers are there voluntarily and rarely see the positions as a long term move, instead using the jobs and as a way station along the road to a better life in America. As in any industry, there are instances of out and out abuse to be sure, but employees quickly vote with their feet and the best manicurists quickly take their new found skills out the door in search of greener pastures. In this relatively free and open labor market, it simply doesn’t pay to be an abusive boss.]

Asian-language newspapers are rife [filled] with classified ads listing manicurist jobs paying so little the daily wage can at first glance appear to be a typo. [Manicure companies charge new hires so little for the invaluable experience and training the ads can at first glance appear to be a typo. In many instances, students are paid to learn the new trade.] Ads in Chinese in both Sing Tao Daily and World Journal for NYC Nail Spa, a second-story salon on the Upper West Side of Manhattan, advertised a starting wage of $10 a day. The rate was confirmed by several workers.

[Because all the employees work voluntarily, most work happily despite the long hours and relatively low wages. However, they have shown themselves unwilling to put up the rare instances of outright abuse.] Lawsuits filed in New York courts allege a long list of [bizarre] abuses: the salon in East Northport, N.Y., where workers said they were paid just $1.50 an hour during a 66-hour workweek; the Harlem salon that manicurists said charged them for drinking the water, yet on slow days paid them nothing at all; the minichain of Long Island salons whose workers said they were not only underpaid but also kicked as they sat on pedicure stools, and verbally abused.

[Entry into the nail salon industry is easy, and upward mobility is high. As a result, labor complaints from the industry are rare and   the self-regulating power of the market has kept New York State Labor Department’s enforcement costs low.] Last year, the New York State Labor Department, in conjunction with several other agencies, conducted its first nail salon sweep ever — about a month after The Times sent officials there an inquiry regarding their enforcement record with the industry. Investigators inspected 29 salons and found 116 wage violations.

[Pay arrangements are often similar to salaried workers, with employees receiving a flat daily wage, regardless of hours worked.] Among the more than 100 workers interviewed by The Times, only about a quarter said they were paid an amount that was the equivalent of New York State’s minimum hourly wage. All but three workers, however, had wages withheld in other ways that would be considered illegal, such as never getting overtime.

The juxtapositions in nail salon workers’ lives can be jarring [serve as a reminder to these new immigrants that while the road to the American dream is filled with much hard work, the pay-off is worth it]. Many spend their days holding hands with women of unimaginable affluence, at salons on Madison Avenue and in Greenwich, Conn. Away from the manicure tables they crash in flophouses packed with bunk beds, or in fetid apartments shared by as many as a dozen strangers.

Ms. Ren worked at Bee Nails, a chandelier-spangled salon in Hicksville, N.Y., where leather pedicure chairs are equipped with iPads on articulated arms so patrons can scroll the screens without smudging their manicures. They rarely spoke more than a few words to Ms. Ren, who, like most manicurists, wore a fake name chosen by a supervisor on a tag pinned to her chest. She was “Sherry.” She worked in silence, sloughing off calluses from customers’ feet or clipping dead skin from around their fingernail beds.

At night she returned to sleep jammed in a one-bedroom apartment in Flushing with her cousin, her cousin’s father and three strangers. Beds crowded the living room, each cordoned off by shower curtains hung from the ceiling. When lights flicked on in the kitchen, cockroaches skittered across the countertops.

Almost all of the workers interviewed by The Times, like Ms. Ren, had limited English; many are in the country illegally. The combination leaves them vulnerable. [Yet even they are provided the opportunity to learn a trade and pursue the American dream.]

Some workers suffer more acutely. Nail salons are governed by their own rituals and mores, a hidden world behind the glass exteriors and cute corner shops. In it, a rigid racial and ethnic caste system reigns in modern-day New York City, dictating not only pay but also how workers are treated.

[Workers are given jobs and wages in accordance with their level of productivity. No is priced out of the market here.] Korean workers routinely earn twice as much as their peers, valued above others by the Korean owners who dominate the industry and who are often shockingly plain-spoken in their disparagement of workers of other backgrounds.  [The common language, among other traits, makes Korean hires more valuable to the owners than – say – a newly arrived Ecuadorian immigrant who only speaks Spanish.] Chinese workers occupy the next rung in the hierarchy; Hispanics and other non-Asians are at the bottom.

The typical cost of a manicure in the city helps explain the abysmal pay. [New workers face few barriers to entry and competition is stiff amongst nail salons in New York City – which has the highest density of nail salons in the country.] A survey of more than 105 Manhattan salons by The Times found an average price of about $10.50. [Where nail salons are less common and barriers to entry such as minimum wage and licensing requirements are higher, labor is more expensive and so are manicures as a result.] The countrywide average is almost double that [of New York], according to a 2014 survey by Nails Magazine, an industry publication.

With fees so low, someone must inevitably pay the price.

[Some do-gooders don’t want these voluntary exchanges between salon owners and employees to take place.] “You can be assured, if you go to a place with rock-bottom prices, that chances are the workers wages’ are being stolen,” said Nicole Hallett, a lecturer at Yale Law School who has worked on wage theft cases in salons. “The costs are borne by the low-wage workers who are doing your nails.”

In interviews, some owners readily acknowledged how little they paid their workers. Ms. Ren’s boss, Lian Sheng Sun, who goes by Howard, at first denied doing anything wrong, but then said it was just how business was done. “Salons have different ways of conducting their business,” he said. “We run our business our own way to keep our small business surviving.”

Many owners said they were helping new immigrants by giving them jobs.

“I want to change the first generation coming here and getting disgraced, and getting humiliated,” said Roger Liu, 28, an immigrant from China, seated inside the salon he owned, Relaxing Town Nails and Spa in Huntington Station, N.Y. As he spoke last summer, an employee, a woman in her 50s, paced the salon, studying a scrap of paper scribbled with the steps of a pedicure, chanting them to herself quietly in Chinese.

It was her first week working in a salon, she said. Mr. Liu was not paying her.

Compelled to work endless hours just to get by, the manicurists live lives that unspool almost entirely within the walls of their salons. An underground [informal] economy has sprung up in Flushing and other city neighborhoods where salon workers live, to help them cope [get ahead]. On weekdays, women walk from door to door like Pied Pipers, taking nail salon workers’ children to school for a fee. Many manicurists [are willing to] pay caregivers as much as half their wages to take their babies six days a week, 24 hours a day, after finding themselves unable to care for them at night and still wake up to paint nails [confident their hard work will one day translate into a better life for their family].

Jing Ren usually spent days sleeping in her slim pallet a few feet from the bed of her 24-year-old cousin, Xue Sun, also a manicurist. She had no time to make other friends.

She eventually started taking English classes, hoping to grasp onto a new life, but she feared the gravitational pull of this one.

“I would feel petrified,” she said, “thinking that I’ll be doing this for the rest of my life.”

Low Prices, Low Pay

As far as small businesses go, it is relatively easy to open a nail salon.

Just a few thousand dollars is needed for things like pedicure chairs with whirlpool baths. Little English is required, and there are few licensing hoops to jump through. Many skip them altogether. Overhead is minimal: rent and some new bottles of polish each month — and the rock-bottom wages of workers.

Beyond the low barriers for entry, manicurists, owners and others who have closely followed the nail industry are hard pressed to say definitively why salons have proliferated.

In the 1990s, nail polish brands began to market more directly to consumers, helping to fuel demand, according to Nails Magazine. Polishes also became more sophisticated; they last longer and are easier to remove.

Census data show the number of salons in New York surged through the 2000s, far outstripping the rest of the country. Growth dimmed slightly during the recession, as lacquered nails remained an affordable treat for many, before climbing again.

But as nail salons have mushroomed, it has become harder to turn a profit, some owners said. Manicure prices have not budged much from 1990s levels, according to veteran workers. Neither have wages.

With their gleaming glass fronts, the salons seem to display their inner workings as transparently as a department store displays a holiday window. But much of how salons operate and how workers are treated is kept deliberately opaque to the outside world. [But the compelling personal stories of new immigrants and rugged entrepreneurs – each one somewhere slightly different along their journey towards the American dream – are often obscured to the outside observer.]

Among the hidden customs are how new manicurists get started. [Unlike so many fields today which require many months of expensive schooling,] Most must hand over cash [hires in the manicure industry pay just a nominal amount] — usually $100 to $200, but sometimes much more — as a training fee. Weeks or months of work in a kind of unpaid apprenticeship follows. [Right away most workers begin taking home tips – often meager compared to projected future earnings, but an early reminder of the value of hard work.]

Ms. Ren spent almost [barely] three months painting on pedicures and slathering feet with paraffin wax before one afternoon in the late summer when her boss drew her into a waxing room and told her she would finally be paid.

“I just burst into laughter unconsciously,” Ms. Ren said. “I have been working for so long while making zero money; now finally my hard work paid off.”

That night her cousins threw her a party. The next payday she learned her day wage would amount to under [, nearly] $3 an hour [plus tips].

Step into the prim confines of almost any salon and workers paid astonishingly low wages can be readily found. At May’s Nails Salon on 14thStreet in the West Village of Manhattan, where a photo of the singer Gwen Stefani with a manicurist hung on the wall, new employees must pay $100, then work unpaid for several weeks, before they are started at $30 or $40 a day, according to a worker. A man who identified himself as the owner, but would give his name only as Greg, said the salon did not charge employees for their jobs [on the job training], but would not say how much they are paid.

At Sona Nails on First Avenue near Stuyvesant Town, a worker said she made $35 a day. Sona Grung, the owner of Sona Nails, denied paying below minimum wage, yet defended the practice, particularly of underpaying new workers. [explained the process]. “When a beginner comes in, they don’t know anything, and they give you a job,” she said. “If you work in a nail salon for $35, it’s very good.”

Nail salon workers are generally considered “tipped workers” under state and federal labor laws. Employers in New York are permitted to pay such workers slightly less than the state’s $8.75 minimum hourly wage, based on a complex calculation of how much a worker is making in tips. But interviews with scores of workers revealed rates of pay so low that the so-called tip calculation is virtually meaningless. [that this system seldom applies to trainees.] None reported receiving supplemental pay from their bosses, as [would be] is legally required [for regular workers] when their day’s tips fall short of the minimum wage. Overtime pay is almost unheard-of in the industry, even though workers routinely work up to 12 hours a day, six or even seven days a week.

Inside the hive of the salon, there are typically three ranks of workers. “Big Job” employees are veterans, experts at sculpting false nails out of acrylic dust. It is the most lucrative salon job, yet many younger manicurists avoid it because of the specter of serious health issues, including miscarriages and cancer, associated with inhaling fumes and clouds of plastic particles. “Medium Job” workers do regular manicures, while “Little Job” is the category of the beginners. They launder hot hand towels and sweep toenail clippings. They do work others do not want to do, such as pedicures.

More experienced workers usually earn $50 to $70 per day, sometimes even $80. Their pay, though, still typically amounts to significantly less than minimum wage, given their long hours.

In the poorer pockets of the city, at low-traffic salons in the Bronx and Queens, many workers are not paid a base wage at all, only a commission.

Nora Cacho was paid about 50 percent of the price of every manicure or lip wax she did at a Harlem shop that was part of a chain, Envy Nails. She frequently earned about $200 for each 66-hour workweek — about $3 an hour. In sandal season, if she was lucky, she left the shop with slightly more — $300 each week, she said. On snowy days, Ms. Cacho, who is part of a class-action lawsuit against the chain, would return home with nothing. The chain’s lawyer did not respond to requests for comment.

Ms. Cacho, who is from Ecuador, initially saw the industry as her financial salvation, as do many other immigrants. But what seems a way up usually gives way to a grinding existence. [decided it was easier to sue her employer than work to get ahead.]

Salon workers describe a culture of subservience that extends far beyond the pampering of customers. [Many of the supposedly abusive practices and grinding aspects of the jobs will sound familiar to people who have had to work for a living before. Tip sharing is a common practice in the food service and bar industry, and does occasionally take place in the nail salon business. Employees are often expected to cover the cost of a spilled bottles of nail polish, similar to restaurant waiters being expected to cover the tabs of customers that dine and ditch. At salons with no official uniform, managers none the less expect workers to dress to a certain professional standard fitting the style of the times. Security cameras protect workers, managers, and customers.] Tips or wages are often skimmed or never delivered, or deducted as punishment for things like spilled bottles of polish. At her Harlem salon, Ms. Cacho said she and her colleagues had to buy new clothes in whatever color the manager decided was fashionable that week. Cameras are regularly hidden in salons, piping live feeds directly to owners’ smartphones and tablets.

Qing Lin, 47, a manicurist who has worked on the Upper East Side for the last 10 years, still gets emotional when recounting the time a splash of nail polish remover marred a customer’s patent Prada sandals. When the woman demanded compensation, the $270 her boss pressed into the woman’s hand came out of the manicurist’s pay. Ms. Lin was asked not to return.

“I am worth less than a shoe,” she said.

An Ethnic Caste System

As the throngs of manicurists gather in Flushing, Queens, every morning, the patter of “good mornings” is mostly in Chinese and Spanish, with the occasional snatches of Tibetan or Nepali. Korean is hardly ever heard among these workers heading to salons outside New York City, many of them hours away.

But to the customer settling into the comfort of a pedicure chair in Manhattan, it can seem as if nearly the entire work force is Korean.

The contrast stems from the stark ethnic hierarchy imposed by nail salon owners. Seventy percent to 80 percent of salons in the city are Korean-owned, according to the Korean American Nail Salon Association.

Korean manicurists, particularly if they are youthful and attractive, typically have their pick of the most desirable jobs in the industry — shiny shops on Madison Avenue and in other affluent parts of the city. Non-Korean [But unlike industries with artificial barriers to entry, opportunities exist even for the least productive] manicurists, are often forced into less desirable jobs in the boroughs outside Manhattan or even farther out from the city, where customers are typically fewer and tips often paltry.

[Even though seventy to 80 percent of the salons in the city Korean owned, the workforce is diverse: mostly Korean in Manhattan, Chinese, Hispanic, and even Tibetan and Nepali elsewhere in the city.]

In general, Korean workers – [who dominate the workforce in the more upscale Manhattan] – earn at least 15 percent to 25 percent more than their counterparts, [in other burroughs] but the disparity can sometimes be much greater, according to manicurists, beauty school instructors and owners.

Some bosses deliberately prey on the desperation of Hispanic manicurists, [make it a policy to open their doors to those with the fewest opportunities and lowest skills, including illegal immigrants from Mexico] who are often drowning under large debts owed to “coyotes” who smuggled them across the border, workers and advocates say.

Many Korean owners are frank about their prejudices. “Spanish employees” are not as smart as Koreans, or as sanitary, said Mal Sung Noh, 68, who is known as Mary, at the front desk of Rose Nails, a salon she owns on the Upper East Side. [Because workers here are free to negotiate on their own behalf, even the prejudiced salon owners extend jobs to these workers. Workers use their comparative advantage to get jobs and get ahead, and employers that act on their prejudices are less competitive as a result.]

Ms. Noh’s salon sits behind the construction barricades of the Second Avenue subway line. Perhaps as a result, she employs a handful of Hispanic women. (Less lucrative shops on out-of-the-way streets or on the second stories of buildings tend to be more diverse.) Ms. Noh said she kept her Hispanic manicurists at the lowest rung of work. “They don’t want to learn more,” she said.

Ethnic discrimination imbues other aspects of salon life. Male pedicure customers are despised by many manicurists for their thick toenails and hair-covered knuckles. When a man comes into the store, almost invariably a non-Korean worker is first draft for his foot bath, salon workers said. [Many manicurists find men disgusting and dislike giving men manicures and pedicures. But the free market results in men being just as welcome in these establishments as women. Some women feel oppressed when they have to service male customers and a handful accuse their managers of being racist for making them serve male customers. But, the men are willing to pay, and while the salon workers may find it disgusting, they don’t let their prejudices stand in the way of the opportunity to make money.]

[Despite the overt ethnocentrism of her employer,] Ana Luisa Camas, 32, an Ecuadorean immigrant, [had no trouble finding work at a Korean owned Connecticut salon. Though the work was hard, she was there voluntarily and the job beat the alternatives available to her given her low skills, and the high barriers to entry in many other fields.] said that at a Korean-owned Connecticut salon where she worked, she and her Hispanic colleagues were made to sit in silence during their entire 12-hour shifts, while the Korean manicurists were free to chat. “For two years I suffered from headaches,” she said. “It was just the stress that was killing me.”

[Thankfully, employers in the salon industry do not enjoy monopsony power over workers, and when the perceived prejudices of owners and managers become intolerable, skilled manicurists have little trouble finding work in more hospitable salons.]

Lhamo Dolma, 39, a manicurist from Tibet who goes by Jackey, recalled a former job at a Brooklyn salon where she had to eat lunch every day standing in a kitchenette with the shop’s other non-Korean workers, while her Korean counterparts ate at their desks.

“Their country people, they are completely free,” she said in an interview in her house in Queens, seated on a low settee beneath her household’s Buddhist shrine. She began to cry. “Why do they make us two different?” she said. “Everybody is the same.”

A Scared Newcomer

There was a bright blue Siamese fighting fish in a Mason jar in a corner of the one-bedroom apartment where Ms. Ren lived with her cousin and four other adults. It rested on a table made from a broken cabinet door. Its name was July, after the month she was told she would finally earn a wage.

It was a rare moment of accomplishment for Ms. Ren, now 21, in her early days in New York City. She had holed up indoors for weeks after arriving, too scared to go outside.

She wished she could be like her older cousin and roommate, Ms. Sun, who emerged from their apartment in Flushing each morning looking more like her customers than a manicurist, in bargain-store imitations of Hermès and Chanel. Ms. Sun woke up early each morning to steam her outfit — even her denim shorts — so that all traces of their grim quarters stayed shut up behind the apartment door.

When business at the salon began to slow in late 2013, Ms. Sun, who goes by Michelle, had an idea. She hopped a cheap bus south to Florida, a place she knew little about other than that it was always warm. She figured sandals — and pedicures — were year-round staples. She wandered from shop to shop until she found work.

Upon her return in spring 2014, Ms. Sun was upset to find Ms. Ren nearly a shut-in. Ms. Sun cajoled her younger charge to call salons listing openings online, taking the phone from her when she was too scared to speak to shop owners.

The day after, Ms. Ren stood on the corner of Franklin Avenue and Kissena Boulevard, her lunchbox in hand, waiting for a van to deliver her to her new salon — where, she did not know.

At Bee Nails, the salon in Hicksville, Ms. Ren fumbled even the most simple tasks at first, overwhelmed by nerves. She spent her days making piles of paper twists to swaddle pedicured toes, or cleaning up nail clippings. Her hands trembled when she tried to paint even her own nails in the break room. She refused to join the other Little Job workers for practice sessions, watching shyly.

A week in, her first manicure was on a man. His girlfriend sat next to him, whispering to him about the manicurist’s shaking hands. Ms. Ren said later her hands only shook harder.

“I tried to calm down on my way back in the van — it’s a long trip and quiet,” she said. “I told myself that I have to prove that I’m capable of conquering all these difficulties and make it.”

At home she stayed up late practicing manicures on her cousin and drafted careful ledgers of her expenses. Her sole income was a few dollars a day in tips, but she was meticulous, tabulating each banana and even her first ice cream from a chiming truck. Beside a doodle of a cone, she wrote “$1.50.” Next to it, in English: “It’s good!”

By October, Ms. Ren had mostly tamed her anxiety. One Sunday morning, as a visitor watched, she sat balanced froglike on a small stool as she hoisted up the feet of a woman in a pink Juicy Couture track suit, deftly scratching off calluses with a roughened foam brick. The woman scrolled on her phone and picked at her cuticles. She addressed Ms. Ren once, when she warned the manicurist of a blister on her heel. Every so often, Ms. Ren sent a nail polish bottle or cuticle nipper flying, but she covered up her error with a titter and useful English phrases her boss encouraged her to practice. “So sorry,” she whispered.

Some evenings, Ms. Sun’s father, a line cook in Manhattan, would whip up elaborate meals of soft-shelled turtle and taro for the young women that reminded them of home. At night, he tucked them into bed with words of encouragement, before drawing closed the wall of curtain that separated his bed from theirs. Try to think of customers’ feet as pig’s feet, he would urge. Don’t they love that Chinese delicacy when he makes it?

As the cold set in, a time of year when many bosses fire much of their salon staff, Ms. Ren grew anxious again. On slow days, she was sent to stand beside the highway in front of the salon in her green uniform bib, waving fliers. A customer review on the salon’s Yelp page described it as “basically a sweatshop,” and she felt it. Sometimes, she spent entire days dusting hundreds of individual plastic boxes of customers’ personal nail tool kits.

“I felt what I had to do was so pointless,” she later said.

Behind the Mercedes

A gold pendant embossed with Chinese characters and entwined with red thread hangs on the door of a two-story house in Center Moriches, on Long Island, about an hour’s drive east from where Ms. Ren works in Hicksville. A wide creek that empties into Moriches Bay lies on the other side of the street. A Mercedes-Benz sport utility vehicle parks in the driveway.

It is the home of the owner of Nail Love, a salon in a nearby shopping center. The charm on the door invokes financial prosperity for the house’s inhabitants. But the lives of the half-dozen manicurists who bunk in the basement are anything but prosperous. [Currently living in the basement are six manicurists working on their American dreams.]

They are employees of Nail Love. Their dimly lit warren is a barracks provided by the salon’s owner, a common arrangement for workers in salons outside commuting distance from New York City. It saves [workers money] owners money and sometimes even turns a profit. In some other such situations, workers must pay rent to their bosses.

Nail salon owners are often the success stories of their immigrant communities. Some owners rose from the ranks of manicurists themselves. In interviews, many owners expressed a vision of themselves as heroic, shouldering the burden of training workers and the risk of employing people who are not legally permitted to work in the United States. Fees extracted from new workers like Ms. Ren are proper compensation for the inconvenience of providing training, they said. Several owners said they felt betrayed when their workers quit or sued.

“They don’t stop to think how difficult it is nowadays to keep the door of our business open to service people,” Romelia M. Agudo, the former owner of a Park Slope salon, Romy’s Nails, wrote in an affidavit asking a judge to dismiss a lawsuit by two of her employees who said they were underpaid and denied lunch breaks.

Many owners defended their business methods as the only way to stay afloat.

Ansik Nam, former president of the Korean American Nail Salon Association, said that in the early 2000s, scores of owners held an emergency meeting at a Korean restaurant in Flushing, hoping to prevent manicure and pedicure prices from sagging further. He said no agreement was reached.

The association’s current president, Sangho Lee, declined a request to address issues of underpayment. So many owners do not pay minimum wage, he said, that he believed answering any questions would hurt the industry.

[Like so many other service industries in America, manicurists often earn the bulk of their pay from tips.] Tucked between the hand dryers of NYC Nail Spa on the Upper West Side, where the beginners’ wage is $10 a day, the grim math of the nail salon industry is seemingly laid bare on [is posted] a neatly typed sign, urging customers in broken English to tip well: “Less tips make us hard to hire good workers, or we have to pay higher wages to hire them, which might also cause a raise on the price.”

In an interview, the owner’s wife, who would give only her first name, Hwu, said the salon’s sales exceeded $400,000 a year but there were significant expenses as well, like rent and payroll. Speaking at the salon in February, shortly after her husband dropped her off in their Cadillac S.U.V., she said some of her beginners were not paid $10 a day. She pointed to a male manicurist on his first day on the job: If he did not show promise, she said, he would not be paid at all.

The owners of Iris Nails, a chain with shops in Manhattan and Brooklyn, had seven stores that generated sales of $8 million per year, according to a 2012 article in Korea Daily, a Korean-American newspaper. At the two Iris salons on Madison Avenue on the Upper East Side, longtime workers described starting wages of $30 and $40 a day. The owners did not respond to requests for comment.

The contrast between owners’ and workers’ lives can be stark.

Sophia Hong, who owned Madison Nails in Scarsdale, N.Y., prides herself on her art collection, including at least one work by Park Soo Keun, a Korean artist who had a painting sell for nearly $2 million at Christie’s in 2012. The art hangs in her home in Bayside, Queens, one of several properties she owns, according to property records, including a Manhattan apartment in a luxury building overlooking Columbus Circle. In 2010, she was sued by an employee at her Scarsdale salon for failing to pay overtime. The case was settled. Ms. Hong declined to comment.

In rare instances when owners have been found guilty of wage theft, salons have often been quickly sold, sometimes to relatives. The original proprietors vanish, along with their assets, according to prosecutors. Even if they do not, collecting back wages is difficult. Owners can claim they do not have the means to pay, and it is often impossible to prove otherwise, given how unreliable salons’ financial records are. [Instances of wage theft by owners are actually quite rare. In those cases, owners were often forced to sell the business, sometimes to relatives. Collecting back wages is difficult, as owners seldom have the means to pay.]

[Lawsuits have led to financial ruin for some unfortunate salon owners.] Despite winning a landmark court award of over $474,000 in 2012 for underpayment, six manicurists from a chain of Long Island salons under the name Babi have so far received less than a quarter of that, they said. The chain’s owner, In Bae Kim, said he did not have the money, even though records show he sold his house for $1.13 million and a commercial property for $2 million just before the trial. [Even after selling his house and commercial property valued at $3.13 million, the chains owner, In Bae Kim, said it wasn’t enough to cover the court award.]

[Then things got worse.] Mr. Kim was arrested last year by the state attorney general’s office on charges of harassing a manicurist at the worker’s new job. He pleaded guilty to disorderly conduct on Jan. 3 and was sentenced to time served — eight days in jail.

Lack of Investigations

During the nearly three months Ms. Ren worked unpaid in the Long Island nail salon, like many manicurists, she had no idea that it was against the law, or that the $30 day wage her boss finally paid her was also illegally low. As an immigrant, she felt happy to have any work at all, she said, and scared to complain. Furthermore, who would listen?

The Labor Department is the New York State agency responsible for monitoring wage violations. An examination by The Times of the department’s enforcement database dating from 2008, obtained under the state’s Freedom of Information Law, found the department typically opens two or three dozen nail salon cases a year across the entire state. According to census data, there were more than 3,600 nail salons in the state in 2012, the most recent year for which figures were available.

The department opened a vast majority of these cases in response to worker complaints, as opposed to initiating its own investigations, the data shows.

A team of investigators regularly performs undercover sweeps of businesses suspected of breaking the law, but the agency had never conducted a sweep of nail salons until last year, said Christopher White, a spokesman for the Labor Department. [With very few complaints from workers or customers in the manicure industry, the Labor Department has largely left the industry to the free market to sort out. So far, it’s a system that seems to be working. In fact,] He declined last month to say more about the salons in the operation or the violations found, because the investigation had not yet been closed. But a review of the 37 cases opened in 2014 showed that almost one-third of them involved shops from a single chain, Envy Nails, the one facing a class-action lawsuit from its workers.

When the department does investigate a salon, more than 80 percent of the time the agency finds workers have been unpaid or underpaid and tries to recover the money, The Times’s analysis showed.

The department declined to make anyone available to discuss its investigative work on the record. It took nine months of repeated inquiries from The Times for the department to turn over part of its enforcement database.

Only a small number of the workers interviewed by The Times said they had ever seen an investigator, from any government agency, at their salon.

Among the Labor Department’s 115 investigators statewide — 56 are based in New York City — 18 speak Spanish and 8 speak Chinese, essential tools for questioning immigrant workers to uncover whether they are being exploited. But just two speak Korean, according to the department. Department officials say all of their inspectors have access to interpreting services.

When investigators try to interview them, manicurists are frequently reluctant to cooperate, more so than in any other industry, according to a Labor Department official involved who spoke on the condition of anonymity because the official was not permitted to talk with reporters. “It’s really the only industry we see that in,” the person said, explaining that it most likely indicated just how widespread exploitation is in nail salons. “They are totally running scared in this industry.” [While one Labor Department official said the refusal to cooperate may indicate the workers are “running scared,” workers we spoke with often said they were happy with their jobs and hopeful for the future.]

[The manicure industry has shown itself to be fairly self-regulating, and the Labor Department appears to have taken notice.]

Manicurists are also required to be licensed, but this is another area where enforcement is lax. [Yet compliance remains high.] There are nearly 30,000 licensed nail technicians in the state, according to the New York Department of State, but numerous manicurists work without licenses. [For some young immigrants, meeting the burdens of the licensing requirements would be prohibitive and price them out of the market. As a result,] Licenses are frequently fabricated, bought and sold.

Manicurists say that even when government agencies do check on their employers, evasion is easy.

Lili, a manicurist from Ecuador who is picked up every morning in Flushing near Ms. Ren, laughs when she recalls the time state inspectors visited the Westchester County salon where she works. Spotting them, her boss barked for all the unlicensed workers — there were 10 — to hustle out the back door.

“So we left, we got in the car, and we took a spin around the neighborhood,” said Lili, who declined to give her surname because she is in this country illegally. “Twenty, 30 minutes later we returned. After they’d gone. We put our uniforms back on and we returned to work.”

No Refunds

This past fall, Ms. Ren’s parents arrived from China. Work had dried up for her mother, an insurance saleswoman, and father, a sometime chef, and they missed their only child. The visitors stuffed the one-bedroom with a total of eight bodies before Ms. Ren, her mother and her father had to move out. The manicurist packed up her pet fish, and the family installed itself a few blocks down Union Street in a dank basement apartment, where for $830 a month the three share one bedroom. [Still modest, but a step up from their previous apartment. For Ms. Ren and her family, this apartment too will likely be only temporary, another one of the chapters in their American dream.]

At work Ms. Ren earned a raise, lifting her spirits. She now made $40 a day.

Inspired by her cousin, who had enrolled again in English classes, Ms. Ren signed up as well in October, three days a week. School, she hoped, would be a way out of a job she had come to loathe, but some days her hands ached too much to go to class — she could not hold a pencil. Other days she was just too tired.

Around the time her first semester of English classes wrapped up, Ms. Ren asked for another raise. It was then she learned there are actually two price lists at her salon. One is for customers. The other is jotted down in a hidden-away notebook and lists the prices employees must pay the owner to learn new skills: such as $100 for eyebrow waxing, $100 to learn how to apply gel and cure it with ultraviolet light. A raise would require a new skill — her boss suggested eyebrows and gel — and the cash fee.

She was in the nail salon van when her boss told her of the fee, as he drove her to a different Long Island salon he owns. He shuttles employees between the two shops, depending upon which is busiest. An iPad propped on the dashboard played video feeds from both salons. Ms. Ren responded to the new fee with uncharacteristic furor.

[Thanks to her free on the job training, Ms. Ren is now a very productive worker. Her time at the lower rungs has earned her much new bargaining power.]

Her boss relented: He would give her a 50 percent discount. She refused.

“I already paid when I first came,” she said. “Now I’m an employee and have been here for so long. Why do I still have to pay to pick up new skills?”

In an interview, Mr. Sun, Ms. Ren’s boss, said the fees were “deposits” so employees did not leave with their new skills for another salon, and were eventually refunded. Ms. Ren said she never got back the $100 she had paid.

For weeks after the van ride, she dreamed of quitting. But there was another semester of English classes in the spring, and though her parents pledged to help support her, they could not do it alone.

The final affront was a red envelope embossed in gold, a traditional Lunar New Year gift her boss placed in her hands in February, the Chinese character for happiness and luck gleaming from the paper. She opened it to find just $20.

She quit on March 8. Her boss said nothing; one colleague hugged her goodbye. After 10 months she had made about $10,000, she said.

Last month [almost immediately], she found a $65-a-day job at another nail salon.

By then, her parents had also found work. Her father is a cook at a restaurant.

Her mother? She became a manicurist, for $30 a day.

Part two of the investigative report comes out today.