Editor’s note: The following article written by Construction Citizen’s newest blogger was originally published in Dallas / Ft Worth Construction News, one of a group of monthly publications which report on the construction industry in Texas.
The Construction Industry may want to improve its “Image” in order to recruit students. CareerCast, a job search and placement website, rated construction jobs in the bottom 10 for the last 3 years. Few, if any, high school counselors recommend students going into the construction workforce. Why should they? What does the industry have to offer these young men and women?
Do your own survey and walk construction sites asking craftsmen:
- Do you have a formal training program?
- Does your company cover your healthcare/disability or life insurance?
- Do you get paid vacation and holidays?
- Does your company have a retirement plan for you?
- Do you have a career path of growth and opportunity?
- Do you have a formal review and evaluation from your supervisor?
- Do you get time and a half pay for overtime?
- Does your company pay you hourly, paying taxes and workers’ compensation?
It used to be that a journeyman carpenter, painter, plumber or mason was a reputable, almost majestic career, because he/she was recognized as an “artisan” of the trade. Along with the title came rewards and benefits such as wage increases, healthcare coverage, workers’ compensation coverage, disability insurance, retirement plans, vacation and holiday pay. More importantly, the employer was responsible to train, educate and transfer information to the next generation of craftsmen to sustain a workforce for the future. This practice preceded us for years as children followed their parents into their respected trades. Honorable careers!
Today the industry struggles to provide training for craftsmen and the market puts even further pressure on the working man. Construction project owners, developers and general contractors “unknowingly” promote unlawful and illegal labor practices that cost the State of Texas millions in tax revenue at a time when Texas most needs help. A common practice in the industry is when owners and general contractors “legitimately” subcontract the legal requirements to pay all labor and payroll taxes down to the lower tier subcontractor and this subcontractor in turn subcontracts the work to a crew leader that misclassifies each of his crew as a 1099 independent contractor or in some cases does not report them at all. No one pays the taxes. The owners and general contractors expect the laws to be followed – in fact, they have demanded it be followed by stating so in their Agreements:
“…Sub-subcontracting to lower tiered subcontractors is prohibited without the expressed consent of the General Contractor...and Subcontractors are responsible for paying all appropriate taxes according to the law…”
They are trying to imply, “It’s not the GC’s or Owners’ problem.” They have assigned that liability and exposure to the lower tiered sub. And there are no checks and balances to enforce the laws. In today’s economic environment, few laborers are going to file a claim against the hand that feeds them, even if it’s a ridiculously sparse amount of feed.
A 2008 Texas Workforce Commission audit found that the construction industry misclassifies more workers than any other industry in Texas. A University of Texas survey, Building Austin: Building Injustice, reported that only 45% of construction workers reported that their employer provided workers’ compensation insurance, yet one in five was injured on the job.
Subcontractors that “1099” their craftsmen, misclassifying them as independent contractors are stealing from the workers by avoiding paying the burden associated with employees’ payroll taxes. There are definitely no benefits associated with promoting a career in construction such as healthcare coverage or a retirement plan. Those costs are anywhere from 20-45% of the project’s labor cost, creating a very large advantage for those that continue to deteriorate our workforce.
This is where the ENFORCEMENT breaks down. Why should anyone speak up? The guys at the top are getting their buildings built “cheap”, and the guys at the bottom are getting their desperately needed cash to pay bills for their families. So who cares?
Here’s who should care. IF the price is competitive, project owners, general contractors and ALL of our industry leaders should understand that the choice to use a reputable contractor that contributes back to their industry, promotes employee careers and pays taxes according to the law will be rewarded with a better product, on time and within budget – not just immediately, but in the future as well. Those questions posed earlier in this article should be asked and followed up with authentication.
But what if the price is not the same? Unfortunately, those groups that are only out for the cheapest price at bid time and continue to turn their heads at our industry’s immoral and unethical practices do not understand the negative impact they are causing. They are part of the problem and not the solution and they continue to contribute to the deterioration of the image, the careers and the products of the future.
Owners, GC’s and Sub’s as well as trade associations have to work together to address this issue. We have to improve the “Image” first before we can promote and sell the careers to students. Reputable contractors cannot continue to “get that low” as they will run out of work and all of our experienced and qualified craftsmen will be looking for jobs in other careers with a brighter future.