Texas companies pay construction workers so little, almost half of them end up relying on safety-net programs costing taxpayers $1.9 billion a year, according to a new study.
Low wages, weak state laws and rare federal law enforcement have turned a solidly blue-collar industry into a poverty trap. Voters should ask why nearly half of full-time, skilled laborers rely on food stamps and Medicaid to care for their children.
The data also bolsters the wisdom of granting visas to undocumented workers and only then strictly enforcing immigration laws to boost wages.
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The low wages and exploitative practices in the construction industry, both in Texas and nationally, cause profound hardship for workers and their families. It also costs the public, the University of California professors wrote. When employers misclassify their workers or pay them under the table, they are defunding and defrauding government programs, including workers compensation, Social Security, and Medicare.
Texas has one of the fastest-growing economies in the U.S. The construction boom in San Antonio, Houston and Austin is the envy of any Rust Belt state.
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One in 12 Texans work in construction, or about 1.2 million people, the Census Bureau reports. The industry contributes $92.3 billion to Texass GDP or about 5 percent. Personal income from construction totaled $87.3 billion in 2019. But that income is unfairly distributed.
Compared to laborers in other Texas industries, twice as many construction workers rely on Medicaid, the health program for the poor, the Childrens Health Insurance Program, Temporary Aid for Needy Families, the Earned Income Tax Credit, and the Supplemental Nutrition Assistance Program, research by UC Berkeleys Labor Center found as part of a nationwide study.
The most obvious explanation is found in the construction contract bidding process. The lowest bidder typically wins, and managers feel the pressure to squeeze every penny possible out of the workforce. Many bend or skirt rarely-enforced laws to bring in underpaid, undocumented laborers.
Stan Marek, CEO of Houston-based Marek construction, has lost many a contract to unscrupulous competitors over the last 50 years, and hes fought for immigration reform for a decade. He expects construction to expand quickly in 2022, and hes worried the corruption will only get worse.
Were on the verge of the biggest boom construction-wise weve ever seen, he told me. My guys should be making 25 percent more, but I would not be able to get a job if I put 25 percent more in it because Im bidding against people who are not paying payroll taxes, who dont have workmans comp and who arent paying overtime.
Most states impose basic standards to protect workers, but not Texas. State lawmakers have consistently killed bills to guarantee decent wages and benefits. And when cities try to step in, GOP lawmakers make city and county prevailing wage and health insurance requirements illegal.
Gov. Greg Abbott may brag this is good for corporations, but kids still need to eat, and parents still get hurt on the job. Rather than make employers pick up the tab, Abbott and these companies shift the burden onto taxpayers.
Construction companies also misclassify workers as independent contractors rather than employees. A corporation has no obligation to guarantee labor laws are followed with independent contractors, and since onsite enforcement is rare, many developers cheat.
Those people work for you. You set their hours. You tell them what to do. Youre directing them. Marek, who directly employs most of his workers, said. The IRS wont touch it. Ive tried to get them involved in Washington, and they say it doesnt work.
Abbott talks a big game about immigration, but hes resisted state requirements that construction companies use E-Verify to check workers status. Lobbyists for residential construction companies have defeated every bill that would require them to respect labor laws.
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Youve got a lot of contractors like me that if we could access the undocumented worker, just get an ID and background check; we could literally take hundreds of thousands of workers just in Texas and put em on payrolls, Marek said.
For every million people you take out of the underground economy and put them on a W2 payroll adds $4.75 billion per year for Social Security, he added.
The immigration problem facing the Texas economy is not undocumented workers taking jobs from Americans but scumbag contractors using unprotected foreigners to drive wages down to the poverty level for American citizens.
State and federal officials must do more to stop crooked construction companies from cheating those who follow the rules. But we also need all hands on deck to meet the nations construction needs, both citizen and foreign workers.
Tomlinson writes commentary about business, economics and politics.
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Tomlinson: Cheating Texas construction companies place $1.9 billion burden on taxpayers - Houston Chronicle