On May 3, William Sproule, Executive Secretary-Treasurer of the Eastern Atlantic States Regional Council of Carpenters, penned an op-ed for the Philadelphia Inquirer about recent activity by PA’s Attorney General Josh Shapiro combatting illegal business practices such as wage theft and misclassification of workers.
From the Philadelphia Inquirer:
[Attorney General Josh Shapiro’s recent criminal charges against a Central Pennsylvanian contractor for theft] also raises larger questions about wage theft and the misclassification of workers as “subcontractors,” neither of which is new. The Attorney General’s Office notes that this is its third prosecution in recent months related to wage theft and worker misclassification. Unscrupulous construction companies have been cheating employees and taxpayers for decades by skipping out on paying their full tax liability. A 2020 study from researchers at Harvard and Michigan State Universities and Allegheny College found that federal, state, and local governments lose an estimated $8.4 billion a year in tax revenue from the industry.
According to the research, more and more contractors are employing labor brokers who pay their workers under the table and keep them off the books — failing to pay and report correct payroll numbers to tax authorities and insurance officials. There are an estimated 2.16 million construction workers in the U.S. who are misclassified as “independent contractors,” when in reality they are actually employees.
These construction industry tax cheats fail to pay their workers fair living wages and rarely provide medical coverage, while also evading federal, state, and local taxes, overtime, and workers’ compensation premiums. This gives them a tremendous competitive edge when it comes to bidding on both public and private jobs against law-abiding contractors who absorb all the costs related to paying taxes and health, retirement, and workers’ compensation benefits. …
The overwhelming majority of Americans pay their fair share of taxes. Aside from the dramatic impact on our federal Treasury — estimated to be $450 billion a year in revenue lost to unpaid taxes — state and local governments throughout the country lose millions each year when construction and other companies pay their workers off the books, or intentionally misclassify them as “independent” contractors, or steal their wages. Elected leaders like Shapiro and Racine should be models for other attorneys general and law enforcement officials throughout the country — and we encourage others to crack down on this issue.