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Please Tip in Cash: The Shadow Economy of American Nail Salons

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In Part II of The Darkest Web, the US nail salon industry is a textbook example of how an innocent person can get involved in global crime.

Brightly lit. Sometimes clean, sometimes not so much. The smell: a distinctive blend of acetone and polish. You could be in any nail salon on any main street in America. Someone sitting behind the front desk or wandering the floor will ask you what you came in for. That person, often an older man, then gives fresh orders to the manicurists and beauticians toiling away silently at their assigned stations. The same series of events repeats itself until the day is done, the nails are polished, and the cuticles trimmed.

There is a glass jar on the front counter for tips. For many nail salon workers, these tips are all they will receive for a hard day’s work. And according to a series of news reports and lawsuits, the dollars in that tip jar may fuel a gray economy, allowing abusive salon owners to rake in illicit profits thanks to the criminal gangs that ferry thousands of illegals into the US every week.

Quietly Suffering

In the approximately 17,000 nail salons across America, beauticians are overworked and underpaid by owners who rely on a constant influx of people who have been smuggled into the United States by organized human trafficking rings. The language barrier between workers and investigators has proven to be an obstacle in tracking these rings.

Aside from the few words needed to establish what the customer came in for, many salon technicians speak little to no English, so it's difficult for the technicians to inform authorities about abuse and wrongdoing.

“There has been a race to the bottom,” said John C. Trang, a staff attorney with Asian Americans Advancing Justice, an advocacy group based in Los Angeles when I spoke to him recently. “Salons are opening up shop close to one another and trying to undercut each other on prices. This may be beneficial to the consumer but the worker bears the brunt of this trend.”

Last year in Orange County, four Vietnamese women filed a lawsuit against their former employers, the owners of Tustin Nail Spa, for violation of several labor laws, including wage and hour violation. Just three years ago, state officials had fined the same salon $28,000, citing similar violations.

Go behind the scenes of the Darkest Web with author Peter Green:

“Even though we smiled and seemed happy in front of customers, the truth was that we were quietly suffering,” said Jenny Hoang, a plaintiff who worked at Tustin Nail Spa for nearly a decade. “We did not fight back because we were grateful to have jobs as refugees who do not speak a lot of English, and we wanted to provide for our family and children.” It is extremely common for workers to feel too intimidated to pursue legal recourse and justice in the face of labor violations. Their income and livelihoods are at stake. “The fear of retaliation is a huge issue since the community is relatively insular, and so news of a ‘troublemaker’ worker can easily get around to other owners,” said Trang.  And since nearly every Vietnamese non-citizen in America escaped the Communist regime or is directly related to someone who did, they grew up with little faith in the legal system. “Many Vietnamese people carry that skepticism about the legal system and laws to America.”

Exploiting Vulnerabilities

Vietnamese immigrants, as well as those from other countries, are drawn to nail salons because of the desire to improve their lives. Vietnamese involvement in the nail business has allowed both owners and workers to earn money and climb to the top of a $7.5 billion industry in the US, as of 2013.

Dr. Quan Manh Ha, Associate Professor in the English department at the University of Montana, knows many fellow immigrants who came to the United States to find work in the nail industry. “People say, ‘Why study in America? Do nails!’” Ha told the Daily Beast.

Nail salon gigs are appealing not only because of the potential for cash earnings, but also because they’re relatively easy to get and fluency in English is not required. Nail salons provide the perfect cover for illegal activity since most are unregulated cash businesses. Tina Alberino, a licensed cosmetologist with fifteen years’ experience in the beauty industry, notes that nail salons are often used as “cover businesses” to hide and legitimize income from massage parlor prostitution businesses, which are more strictly regulated. As one investigator with a state human trafficking department put it: “For every one parlor that goes up, six nail salons are required to filter the cash through.”

Endless Bondage

California nail salons, mostly owned and operated by Vietnamese people, are especially notorious for labor violations and withholding wages. But the exploitation of nail salon workers by criminal gangs is a major problem elsewhere, too. “Wherever you have immigrants, you have the potential for human trafficking,” Tom Perez, the former US Secretary of Labor told WGBH in an interview.  

FORCED LABOR: Similar to the trafficked salon workers, in this clip from McMafia, we see how an innocent job-seeker is violently forced to become the future escort of Semiyon Kleiman, an Israeli crime boss

Law enforcement officials in Rhode Island and Massachusetts have reported an increase in human trafficking in recent years. By some estimates there are around 20,000 victims brought into the United States each year. And nail salons have been found to be notorious fronts for human trafficking activities. "I think there is a reluctance to believe that this is happening in our communities and I’d say especially in affluent communities in and around Boston," said Julie Dahlstrom, an immigration lawyer. "People believe that this is an international problem, that it happens in other countries. It happens in Third World countries; it doesn’t happen within our communities. [They assume] it doesn’t happen in nail salons or massage parlors that we frequent or with women that we might know or interact with, but it does."

In 2015, the New York Times published an explosive article on working conditions in some of the 2,000 nail salons in New York City, uncovering rampant wage theft, and suggesting that many salon workers were struggling to pay off human traffickers. Dr. Kimberly Mehlman-Orozco, the author of a recent book on trafficking entitled Hidden in Plain Sight: America's Slaves of the New Millennium, said she’s seen a number of cases where salon owners worked with human traffickers to ensure a steady supply of cheap labor for their businesses. Workers are held in place by the invisible chains of debt bondage, said Mehlman-Orozco. “Some of the women are deceived into believing that they have incurred exorbitant debts. They can have their identification documents taken away and threatened with deportation if they don't comply,” she said in an interview.

In some cases wages are withheld to ensure traffickers get paid; nearly every worker in troubled salons can report instances of their wages being withheld. In a report on human trafficking in the US, Polaris, a group that tracks the trade and assists victims, said nail salons are often among the businesses that “present a façade of legitimate spa services, concealing that their primary business is the sex and labor trafficking of women trapped in these businesses.” While these nail, hair, and massage parlors often appear to be individually owned stores, the majority are part of larger networks. The Polaris report notes that one to three people can own several businesses at a time, and estimates that there are at least 7,000 storefront businesses offering sex for sale in the US.

Some Reforms

In the aftermath of the New York Times exposé, the widespread abuse of salon workers rose to the top of the national—and international—conversation. Four days after the article’s release, Governor Cuomo created the Nail Salon Industry Enforcement Task Force to investigate the exploitation of salon technicians, and enforced new crackdowns on toxic chemicals found in nail products .To combat the language barrier, he also ordered multi-language signage to be posted informing salon workers of their rights (salon owners who refused to comply were closed by the state). To date, the task force has forced at least 143 salons to pay back over $2 million in illegally withheld wages and overtime to 652 workers who were paid less than minimum wage.

A year later, the governor announced that all nail salons must have ventilation, in an attempt to reduce the respiratory and skin issues caused by workers’ constant contact with certain chemicals used in salons. “New York is taking the lead in creating fair and reasonable rules to protect nail salon workers and customers from dangerous chemicals,” Governor Cuomo said. “This is an industry where workers have long been prone to exploitation and unsafe working conditions—and these regulations are the latest step this administration has taken to right these wrongs and help ensure employees across New York are treated fairly and with dignity."

Nail salon reforms are also taking place in California, where the push for better working conditions has found some success. Still, it’s hard to tell whether any major smuggling rings have been broken up.

With the revelations of the last few years, the future of the nail industry is unclear. But even just informing consumers who had never thought twice about the treatment of their nail technicians was a huge step in the process of liberating salon workers. Simply said: be mindful and please tip your technicians directly in cash. 

You've finished Part II of the Darkest Web, now watch more international intrigue on McMafia, a story of global crime incorporated, co-produced by AMC and the BBC, premiering on February 26 on AMC at 10/9 central. 

Illustrations by Patrick Leger