The Epidemic of Wage Theft in Residential Construction

• In Event: 603 - Section on Labor and Labor Movements Paper Session. Labor Besieged: Repression and Resistance in the Contemporary United States

Abstract

This paper examines the costs of wage theft and the illegal misclassification of workers as independent contractors in the residential construction industry. Based on 31 interviews with construction workers, community and union activists, contractors, homeowners and government officials this research looks at the national homebuilder Pulte Homes and its subcontractors in Massachusetts. Our findings suggest that in the wake of the 2009 recession a new system of construction emerged that has intensified the use of subcontractors that systematically use misclassification and wage theft of primarily immigrant workers to generate profit. This new production regime is victimizing workers in construction in unprecedented numbers, threatening legitimate contractors, and defrauding the Commonwealth and federal government of tax revenue. We also document how the currently regulatory structure – formed in a time of regularized employment— is woefully ineffective against these new kinds of employers and this production regime. Even in the rare case where charges have been brought against subcontractors in Massachusetts, most have not paid fines and often reformed as new companies to avoid prosecution. And although Pulte Homes was the major beneficiary of these decreased labor costs due to wage theft and illegal misclassification, these have been immune from prosecution. We make a number of policy recommendations at both the state and federal to better regulate this emerging construction practice and better protect workers, homeowners and taxpayers.

Author

• Tom Juravich, University of Massachusetts