Agenda - Council Work Session - 07/28/2026

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HOME - FACTS - TABLES - VIDEOS - INFOGRAPHICS - AGENCIES - RESEARCH • • • RESEARCH SORTED BY YEAR • • • Ormiston, Russell; Dale Belman; and Mark Erlich. (2020). An Empirical Methodology to Estimate the Incidence and Costs of Payroll Fraud in the Construction Industry. Allegheny College; Michigan State University; Harvard University. Key Finding: In the average month in 2017, between 12% and 21% of construction industry workers were misclassified as independent contractors or working strictly off -the -books. Over the peak summer months, this increased to between 13% and 22%. Due to payroll fraud, construction companies illegally reduce labor costs by between $6.2 billion and $11.7 billion per year. State workers' compensations programs experienced a $1.7 billion shortfall due to misclassification. State unemployment insurance plans experienced a shortfall of up to $725 million. State income tax revenues are also $160 million to $552 million lower. Between $1.4 billion and $4.3 billion owed to Social Security and Medicare and $319 million and $1.3 billion in federal income taxes was never paid in 2017 due to payroll fraud. Under federal wage statutes, workers are entitled to time -and -a -half for hours worked over 40 hours per week and to premium pay for work over holidays. Employers who misclassify workers as independent contractors can avoid paying these additional wages, resulting in $811 million to $1 billion in unpaid overtime and premium wages. Schmitt, John; Heidi Shierholz; Margaret Poydock; and Samantha Sanders. (2023). The Economic Costs of Worker Misclassification. Economic Policy Institute. Kev Finding: When employers misclassify workers as independent contractors, they deprive them of fundamental labor rights. In construction, an independent contractor loses out on as much as $16,729 per year in income (32%) from being misclassified as an independent contractor compared with what they would have earned as an employee. Revenue for social insurance programs —Social Security, Medicare, Workers' Compensation, and federal and state unemployment insurance —decreases by as much as $2,965 per construction worker per year due to misclassification as well (32%). Kelsay, Michael. (2023). Worker Misclassification and Wage Theft in the Construction Industry in Missouri. University of Missouri -Kansas City. Key Finding: In 2020, 21% of workers in Missouri's construction industry were either misclassified as independent contractors or working "off -the -books" in cash -only arrangements. Misclassification and wage theft in the construction industry cost construction workers between $334 million and $465 million in lost wages and fringe benefits annually. Payroll fraud also costs Missouri $69 million in lost workers' compensation contributions, $28 million in lost unemployment insurance contributions, and $45 million in forgone state income tax revenue. Hacker, Chris; Ash-Har Quraishi; Amy Corral; Ryan Beard. ( ). "Wage Theft Often Goes Unpunished Despite State Systems Meant to Combat It." CBS News. Key Finding: Even when wage theft is reported, employers often manage to avoid paying back the wages they owe. CBS News submitted public records requests to nearly every state labor department in the country and built a database of more than 650,000 total complaints. Of those cases, state agencies ruled in favor of claimants only about half of the time. Even when workers won their claims, more than a third of those successful cases —totaling nearly $1 billion —showed no money was ever recovered. Finally, if wage theft was treated the same as felony theft (or the threshold at which a misdemeanor street crime becomes a felony), 177,000 wage theft cases in 25 states could have been felony cases. This includes over 25% of cases in New Jersey, Illinois, Massachusetts, New Hampshire, Kentucky, Indiana, Maryland, New York, Maine, Montana, Minnesota, Kansas, Utah, and Michigan. Siegelbaum, Max; Agnel Philip; and Lam Thuy Vo. (2023). "127,000 New York Workers Have Been Victims of Wage Theft." ProPublica. Kev Finding: Analyzing federal and state databases of labor violations obtained from the U.S. Department of Labor and the New York State Department of Labor, investigative reporters found that more than $203 million in wages had been stolen from 127,000 workers in New York from 2017 through 2021. About 1,600 construction companies stole wages from more than 7,700 New York workers from 2017 through 2021. The article notes that "the amount of wage theft is almost certainly a significant undercount." 48