High Level of Public Assistance for Construction Workers in Nonunion Sector
Updated: Apr 7, 2022
According to a recent report from UC Berkeley Labor Center, construction workers are becoming increasingly reliant on public safety net programs for survival. However, the data also reflects the fact that the growing dependence on public assistance is due to an increase in workers employed in nonunionized roles.
When compared to other industries, construction workers receive an inordinate amount of assistance. According to the report, 39% of construction worker families are entered in some form of public assistance such as Medicaid. For context, across all industries, there is a 31% enrollment in public assistance. This amounts to $28 billion in public assistance to construction families, which is 10% of the entire amount tapped by all working families.
The union path
The divergence in career trajectories between union and nonunion sectors is significant. Union benefits can negate the need for public assistance with greater access to health insurance and paid sick days. The Economic Policy Institute reports that, "94% of workers covered by a union contract have access to employer-sponsored health benefits, compared with just 68% of nonunion workers and 91% of workers covered by a union contract have access to paid sick days, compared with 73% of nonunion workers."
As far as pay standards, EPI states that union jobs offer an average of 11.2% more in pay than nonunion jobs.
The nonunion path
The Berkeley study points out that misclassification as independent contractors is the defining reason for the growing need for public assistance. "The reason for the excessive use of independent contractors and the high levels of misclassification is obvious. Around one-third of labor costs can be eliminated by classifying workers as independent contractors; employers do not have to pay unemployment insurance, Social Security, Medicare, or workers’ compensation premiums."
Mark Erlich, a research fellow at Harvard Law School's Labor and Worklife Program says that It's up to employers to protect their workers and help end misclassification. He stressed, "the single best thing a builder could do is to encourage federal and state regulatory agencies to crack down on misclassification and cash compensation." Worker misclassification amounts to wage and tax fraud. State labor boards are constantly fighting a battle in putting these practices down. Even more criminal and equally draining on public assistance programs is a cash pay system that is completely off the books.
Last year, NGC construction was ordered to pay fines amounting to over $7 million. The California Labor Commission determined that the company had defrauded 724 of its workers over a three year period. In another case from 2021, JPI construction was cited $1.7 million by the California Labor Commission for underpaying 265 employees. In both cases, unpaid hours and wages were tallied by investigators and it was determined that the victims earned less than minimum wage.
Pay this low with no benefits necessitates safety net programs.
The study paints a picture that there is a decline in union membership, but that data is not representative across all industries. Membership rates in construction unions specifically have maintained over the last three years. What has risen, is the number of nonunion workers in the construction industry and this is what creates the spike in public assistance numbers outlined in the study. This is all a result of unscrupulous contractors pushing their bottom line in lieu of the livelihoods of the workers and their families.
When the scourge of misclassification and wage fraud is stomped out, multiple issues will be addressed by workers earning a living wage, one of which is less reliance on public assistance.
Read report on UC Berkeley Labor Center