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In 2025, public sector construction in the United States was a little more than $517 billion, <br />according to the Federal Reserve Bank of St. Louis. Most of this funding was required to be <br />awarded to the lowest bidder. Low bid requirements certainly play a role in helping <br />contain costs on public projects, but they have the unintentional side effect of incentivizing <br />contractors to seek any advantage that will increase their odds of winning the low bid. <br />Consequently, some contractors will choose to employ exploitative schemes like <br />misclassification, payroll fraud, and wage theft in order to do so. <br />And research backs this up, showing how prevalent these issues have become within the <br />construction industry: <br />23% of Minnesota construction workers are misclassified or paid off the books, reducing <br />their wages and benefits by 36% on average.' This reduces state tax revenues from the <br />construction industry by about $136 million each year ($65 million in income taxes, $13 <br />million in unemployment insurance contributions, and $58 million in workers' <br />compensation premiums).2 <br />Across all industries, 316,000 Minnesota workers are victims of wage theft each year, <br />losing about $6.2 billion. This also deprives government entities of about $1.3 billion in tax <br />revenue annually, putting more strain on crucial public safety net programs like Social <br />Security, Medicare/Medicaid, unemployment insurance, and workers' compensation. <br />1 Goodell, N., & Manzo IV, F. (2021). The Costs of Wage Theft and Payroll Fraud in the Construction <br />Industries of Wisconsin, Minnesota, and Illinois. Midwest Economic Policy Institute. <br />httns: //dwd.wi.gov /misclass-taskforce /ndf /meeting's /210114 /costs-of-navroll-fraud.ndf <br />z Ibid.. - - - - - <br />