Calling for a “high-profile crackdown” in New York — why even have construction labor statistics?
Posted by Mark Avera on 11 Jun 2007 at 02:52 pm | Tagged as: Career Advice, Construction Jobs, Industry News, Uncategorized
Originally posted on TopBuildingJobs.com:
A New York Times article published today, Investigating Mislabeling of Workers, highlights Gov. Eliot Spitzer’s plan to “step up enforcement against thousands of companies that illegally misclassify workers as independent contractors to cheat on taxes and skimp on employee benefits.” This announcement comes on the heels of a February, 2007 Cornell University study: The Cost of Worker Misclassification in New York State.
The state labor commissioner, M. Patricia Smith, targeted the initiative directly at the building industry: “We’re most concerned about the problem in the construction industry right now,”… read the rest of the article here.
So, what do our readers think? Do you view this as a potential risk for national building companies that could affect the industry in general, or simply a localized and fleeting occurance that will have little to no effect? Also, do you percieve the widespread belief in the inaccuracy of homebuilding labor statistics as having a negative impact on the construction industry? Is there something we can do about it?
I think for the most part building companies are doing the right thing. Is this issue isolated to NY?
Jon,
First let me begin by saying you are correct: the MAJORITY of companies in all fields are doing the right thing.
According to the Cornell study, “Approximately 45,474 construction workers or 14.8% of the construction workforce in New York State are misclassified in a given year” (2007: pg 2). That means that in New York, over 85% of workers are correctly classified. Furthermore, it does not portray this 15% that is misclassified as being evenly distributed across all companies. I believe it to be likely that a smaller number of companies use this (misclassification) technique in large numbers, rather than a larger number of companies using this technique in small numbers.
Additionally, it must be pointed out that at least some of these ‘misclassifications’ are bound to be genuine mistakes, mislabelings, or accidents: not every mislabeled Independent Contractor is connected with dodging taxes. Honest people and upright companies occasionally make minor mistakes, and while they should be more careful, the mislabeling is not necessarily representative of their character.
In response to your question, the original D.O.L. used samplings from across the nation. “The purpose of the study,” it explains, “was to provide a better understanding of the IC work arrangement and its potential impact on Unemployment Insurance (UI). The research design addressed the following questions: Who are ICs? Is there a variance in the IC classification system? Which occupations and industries are they in? Is the IC phenomenon employer driven or worker driven? Do employers deliberately misclassify employees as ICs, and if so, what is the impact on trust funds?
In order to obtain information on ICs from as wide a variety of sources as possible, and in a cost-effective manner, the methodology used included a review of literature, research on the definitions and tests used by states to determine IC status and data collection on a variety of relevant issues. Interviews were conducted with representatives from State Employment Security Agencies (SESAs), Wage and Hour, Worker’s Compensation, employer organizations, unions and advocacy groups to obtain insight on IC use, misclassification and the strategies implemented to regulate and monitor ICs” (2000 : pg. i).
So, the original information leveled against the construction industry was collected from a plethora of different groups, all across the United States. In other words, the problem of misclassification is a nationwide problem…New York is simply the only state in the media at the moment (other states have taken steps similar to New York’s: for example, New Jersey Gov. Jon S. Corzine launched a plan last summer to tackle IC misclassification).
If there is one thing New York can teach us, it is that respected institutions (Cornell) can place pressure on their local and state governments to act on the issue. The D.O.L. study has been available since 2000, but it took a Jan. 2007 report on New York specifically to mobilize the state government to action. It is here that my question has its value: do you think that other states will follow in New York’s footsteps, even in the absence of any specific reports tailored to their state? In other words, will state governments start reacting on their own or will they continue to follow the trend we have seen over the past seven years: do nothing until some local group insists on localized (state) enforcement, as Cornell did in New York’s case?
The big factor here is that the Cornell report was fairly high profile, and is receiving even more attention due to Gov. Spitzer’s actions. In it, the authors call for “high profile crackdowns”, while simultaneously pointing out that it is a problem of the “nation”, NOT simply a problem of New York.
MWA