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fringe benefits.21 The state annually loses
<br />$136 million in state tax revenues due to
<br />construction payroll fraud. Victims of wage
<br />theft are also often victims of other forms of
<br />exploitation like human trafficking.
<br />A survey of construction workers in the
<br />Twin Cities area by a worker advocacy non-
<br />profit, Centro de Trabajadores Unidos en
<br />la Lucha (CTUL), revealed the widespread
<br />nature of the abuse and exploitation in the
<br />Twin Cities construction market.22 Among
<br />those surveyed by CTUL, 48% reported
<br />experiencing wage theft, 44% reported that
<br />their employer does not provide them with
<br />proper safety equipment and 30% said that
<br />they fear retaliation if they complain to their
<br />supervisors.23 The findings corroborate
<br />national research on wage theft,24 workplace
<br />safety,25 and workplace retaliation.26
<br />Unfortunately, the use of irresponsible
<br />contractors occurs far too often on publicly
<br />financed affordable housing projects.
<br />2I Nathaniel Goodell and Frank Manzo IV, "The Costs of and
<br />Wage Theft Payroll Fraud in the Construction Industries of
<br />Wisconsin, Minnesota, and Illinois Impacts on Workers and
<br />Taxpayers," Midwest Economic Policy Institute, 2o2s, https://
<br />midwestepi.files.wordpress.com/2o2o/io/mepi-ilepi-costs-of-
<br />payroll-fraud-in-wi-mn-il-final.p df
<br />22 The survey was conducted between January and March
<br />2019. Researchers surveyed 76 construction workers on and
<br />off job sites about wages, benefits, training, and workplace
<br />health and safety. Respondents worked on a diverse range of
<br />project types including commercial buildings, multi -family
<br />residences (e.g apartments, condominiums, senior hous-
<br />ing, etc.), single-family residences (remodeling as well as
<br />new construction). Additional survey methodology details
<br />can be found on page 4 of the previously cited Building
<br />Dignity and ResRect study: https://indd.adobe.com/view/
<br />ef11f675-oa66-4lfb-9146-f673cf999531•
<br />23 Ibid, pages 8-so.
<br />24 David Cooper and Teresa Kroeger, "Employers steal billions
<br />from workers' paychecks each year," Economic Policy
<br />Institute, May so, 2017, https://www.epi.org/publication/
<br />employers -steal -billions -from -workers -paychecks -each year/.
<br />25 Beth Braverman, "The so most dangerous jobs in
<br />America," CNBC, December 28, 2019, https://www.cnbc.
<br />com/2or9/I2/27/the-Io-most-dangerous-jobs-in-america-ac-
<br />cording-to-bls-data.html.
<br />26 Annette Bernhardt et al., "Broken Laws, Unprotected
<br />Workers: Violations of Employment and Labor Laws
<br />in America's Cities," Center for Urban and Economic
<br />Development, National Employment Law Project and
<br />UCLA Institute for Research on Labor and Employment,
<br />2009, https://www.nelp.org/wp-content/uploads/2o15/o3/
<br />BrokenLawsReport2oo9.pdf.
<br />2.1 FORMS OF EXPLOITATION
<br />Construction employers are increasingly
<br />relying on multiple tiers of subcontracting,
<br />including the use of so-called "independent
<br />contractors" who are often nothing more
<br />than employees who have been illegally
<br />misclassified by employers' payment
<br />of "piece rate" which can result in loss
<br />of overtime and safety lapses and the
<br />use of temporary staffing firms or labor
<br />brokers to meet short term labor needs.
<br />These employment practices obfuscate
<br />employment relationships, offload risk to
<br />individual workers and hinder enforcement of
<br />health, safety and employment laws.
<br />The situation is made worse when project
<br />owners fail to take responsibility for labor
<br />abuses on their projects. Developers and
<br />other project owners frequently assert that
<br />any misconduct that occurs on projects
<br />that they control is the sole responsibility
<br />of contractors, while contractors often
<br />seek to displace responsibility to lower -tier
<br />subcontractors.
<br />Yet it is intense downward cost pressure
<br />imposed by developers seeking to maximize
<br />profits that pushes contractors to offload
<br />responsibility through the use of multi -tier
<br />subcontracts and so-called independent
<br />contractors who are often nothing more than
<br />labor brokers. These employment practices
<br />lead to what experts describe as a fissuring
<br />of the workplace. This fissuring shifts the
<br />"basic terms of employment such [as] hiring,
<br />evaluation, pay, supervision, training [and]
<br />coordination" to multiple organizations,
<br />and thus "responsibility for [workplace]
<br />conditions [and worker safety] has blurred."27
<br />These employment models shift risk off
<br />employers, while making it increasingly
<br />difficult to hold employers accountable for
<br />workplace standards.
<br />27 David Weil, "The Fissured Workplace: Why Work Became
<br />So Bad for So Many" (Boston: Harvard University Press,
<br />2014), February 17, 7.
<br />North Star Policy Action 7
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