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HOME — FACTS — TABLES — VIDEOS — INFOGRAPHICS — AGENCIES — RESEARCH <br />Sources Listed by Release Year <br />Schmitt, John; Heidi Shierholz; Margaret Poydock; and Samantha Sanders. (2023). The Economic Costs of <br />Worker Misclassification. Economic Policy Institute. <br />Kev Finding: When employers misclassify workers as independent contractors, they deprive them of fundamental labor <br />rights. In construction, an independent contractor loses out on as much as $16,729 per year in income (32%) from being <br />misclassified as an independent contractor compared with what they would have earned as an employee. Revenue for <br />social insurance programs —Social Security, Medicare, Workers' Compensation, and federal and state unemployment <br />insurance —decreases by as much as $2,965 per construction worker per year due to misclassification as well (32%). <br />Kelsay, Michael. (2023). Worker Misclassification and Wage Theft in the Construction Industry in Missouri. <br />University of Missouri -Kansas City. <br />Kev Finding: In 2020, 21% of workers in Missouri's construction industry were either misclassified as independent <br />contractors or working "off -the -books" in cash -only arrangements. Misclassification and wage theft in the construction <br />industry cost construction workers between $334 million and $465 million in lost wages and fringe benefits annually. <br />Payroll fraud also costs Missouri $69 million in lost workers' compensation contributions, $28 million in lost unemployment <br />insurance contributions, and $45 million in forgone state income tax revenue. <br />Juravich, Tom; Russell Ormiston; and Dale Belman. (2021). The Social and Economic Costs of Illegal <br />Misclassification, Wage Theft, and Tax Fraud in Residential Construction in Massachusetts. University of <br />Massachusetts -Amherst; Allegheny College; Michigan State University; Institute for Construction <br />Employment Research (ICERES). <br />Kev Finding: Audits of employer payrolls from 2017 to 2019 indicate that more than one -in -six Massachusetts construction <br />employers (17% to 18%) misclassify their workers as independent contractors. Utilizing a well -established empirical <br />approach of indirectly estimating the full extent of misclassification, there were between 22,000 and 37,000 workers <br />affected by wage and tax fraud in 2019, accounting for 9% to 16% of the industry's workforce. This was especially prevalent <br />among building finishing contractors (e.g., drywall, finish carpentry, painting). This led to $41 million in lost unemployment <br />insurance contributions $41 million in lost income taxes, and $78 million in lost workers' comp premiums in 2019. <br />Ormiston, Russell; Mark Erlich; and Dale Belman. (2021). Payroll Fraud in New York's Construction <br />Industry: Estimating its Prevalence, Severity and Economic Costs. Allegheny College; Harvard University; <br />Michigan State University; Institute for Construction Employment Research (ICERES). <br />Kev Finding: There were between 76,000 and 126,000 workers who were either misclassified as independent contractors <br />or employed off -the -books in New York's construction industry in 2017, representing 13% to 21% of all construction <br />workers. This resulted in $289 million in unpaid workers' comp premiums and a $49 million shortfall in the state UI fund. <br />Jacobs, Ken and Kuochih Huang. (2021). The Public Cost of Low -Wage Jobs in California's Construction <br />Industry. University of California, Berkeley. <br />Kev Finding: 48% of families in which at least one adult who works in construction are enrolled in public safety net programs <br />such as Medicaid, CHIP, EITC, and SNAP at an estimated annual cost of $3 billion. <br />Goodell, Nathaniel and Frank Manzo IV. (2021). The Costs of Wage Theft and Payroll Fraud in the <br />Construction Industries of Wisconsin, Minnesota, and Illinois: Impacts on Workers and Taxpayers. Midwest <br />Economic Policy Institute. <br />Kev Finding: When compared to employees doing similar work, independent contractors earn about 30% in total <br />compensation in the construction industries of Wisconsin, Minnesota, and Illinois. This includes 13%-22% less in annual <br />wages and 62%-66% in total benefits. Wage theft and payroll fraud cost a total of $362 million in lost state income taxes, <br />unemployment insurance contributions, and workers' compensation premiums in these three states every year. <br />13 <br />