Dive Brief:
-
One-sixth of California’s 895,000 construction workers are paid under the table or mislabeled as an independent contractor, says a study by the research group Economic Roundtable. For trades like drywallers and tile installers, that number could be as high as one in four.
-
This so-called “gray employment” in the state’s $152 billion construction industry has created an underground economy. Since unreported construction workers earn only about half of what formal, on-the-books employees earn, companies who use them can underbid their competitors for jobs.
-
The incidence of unreported and misreported laborers has risen 400% since 1972, the report notes.
Dive Insight:
This growing system of payroll fraud, labor violations, and tax evasion has a casualty other than the underpaid laborer: As high-skilled, higher-paid construction workers age out of the profession, their cut-rate replacements have less experience and are more likely to be transient. The Economic Roundtable report advocates wage equity for workers and state-funded incentives for contractors who legally classify their employees and pay them on the books.