One indicator of where we are in the economic recovery is the Gross Domestic Product (GDP), a measure of the output of goods and services produced by labor and property as reported by the US Department of Commerce’s Bureau of Economic Analysis.  Their most recent analysis of the final quarter of 2010 gives a bit of good news.  Yesterday Bloomberg reported that commercial construction contributed to the gross domestic product in the last quarter of 2010, after delivering a deficit to the number during every quarter since the middle of 2008. 

Even more promising, the article points to the close relationship between commercial construction spending and another market indicator, the Federal Reserve’s Industrial Production and Capacity Utilization index, which measures what US factories, mines and utilities produce.  Bloomberg’s chart shows that commercial construction generally follows the same pattern as industrial production, only about a year afterwards.  Read more » about Harbinger of Recovery

In Part 3 of the I-Team report, reporter Randy Travis continues his undercover investigation of illegal workers laboring on publicly funded construction projects in the Atlanta area.

“The goal of the Stimulus Bill was to stimulate the economy and put Americans back to work.  A FOX 5 I-Team investigation discovered one local stimulus project is actually making it easy for illegal immigrants to get those jobs.

To get a job in this country, you have to show identification and prove you can legally work.  So why did one company on this stimulus project say to get work there, you don't need any papers at all?”   Read more » about Fox 5 in Atlanta Chases the Illegal Worker Story Further

In part 2 of their investigation which we told you about last week, Randy Travis, a reporter with Fox 5 in Atlanta, follows the money on the use of undocumented workers.  In this case, 50 bricklayers from Mexico were employed to work on two school sites and the Gainesville, GA police department headquarters, but were not paid for the work by the subcontractor Surig & Sons who hired them to do the work.

According to the video, even though the masons provided false papers, they were allowed to work on the projects and then were not fully paid by the company for the work that they performed.  Read more » about Wage Theft in Georgia

An investigative news team from Fox 5 television in Atlanta recently took a hidden camera onto a public school construction site in an effort to determine the use of undocumented workers on a publically funded project, something prohibited by law in Georgia.  What they found was a “sub-sub-contractor” – a masonry company using illegal workers to do the work, to the detriment of local masonry companies who only use legal verified workers.  By state law, all construction workers on publicly funded projects in Georgia must have their identities checked with E-Verify to be sure that they have a legal right to work, but the masonry company laying bricks on a new school was “not even registered as an E-Verify company.”   Read more » about No Documents? No Problem!

Democratic lawmakers in Nevada outlined a jobs bill that they will submit to the Nevada Assembly on Monday.  The bill is aimed at keeping construction projects “Nevada centric” by restricting contractors to certain sources for their labor and materials.  An article on the KTVN Channel 2 News website explains:

Lawmakers want a bidder's preference built into the bill that basically gives Nevada companies a home state discount for staying local. However, there are a few requirements.

"At least 50% of the workers employed on the Nevada public works project must be Nevada residents," said Democratic Assemblywoman Debbie Smith.   Read more » about Nevada Tries Local Content Bill

The political protests and related violence over the past few weeks in Egypt have not surprisingly impeded progress on construction projects in that country.  Many international companies have evacuated their employees to their home countries, while local firms have closed offices and asked their staff to remain at home.  Prior to the unrest, those in the industry were looking forward to a successful year as the government had promised to fund several large infrastructure projects and construction projects in general were on the increase.

Engineering News-Record (ENR.com) reported today on the situation after talking with representatives from several firms with ongoing projects there.  Read more » about Construction in Egypt on Hold

Lawrence Rebman, director of the Missouri Department of Labor and Industrial Relations, spelled it out very clearly in his recent Director’s Spotlight entitled Worker Misclassification is Bad for Business.  He states the case against those employers who misclassify their employees in the State of Missouri to avoid the payment of unemployment taxes, payroll taxes, unemployment taxes, sick pay, overtime, health insurance, vacation pay and several other items.  His article reports that those employers who are caught misclassifying their workers as independent contractors without passing the smell test are subject to $50 per employee per day up to the max of $50,000 and also subject to the Division of Employment Security (DES) being able to penalize the misclassifying employer up to 25% of the amount being defrauded from the state.  Rebman reports:   Read more » about Missouri DOL Director Brief on Misclassification

We received a link to a Yahoo Finance article from a fan of Construction Citizen.  The article is entitled: Coalition of 'Unlikely Bed Fellows' Continues Growing to Nail Dishonest Employers.

The article describes a “coalition of employers, businesses, associations and labor representatives” which have united to work with state agencies in an effort to enforce California construction laws and regulations so that unscrupulous violators in the construction industry are held accountable. 

The California Professional Association of Specialty Contractors (CALPASC ) started a program to support thousands of businesses who are fighting employers who are misclassifying employees as independent contractors and who are perpetrators of wage theft in the process.

The article quotes Brad Diede, chief executive officer of CALPASC as saying:

"The urgency of this issue cannot be overstated.  The recession has fueled more cheating than ever, and law-abiding, legitimate construction employers and employees go at risk each day these violators succeed."   Read more » about Strange Bedfellows With a Common Goal

In a January 19th Houston Chronicle article entitled, "Working: A plea for fair play", L.M. Sixel discusses how due to the economy, many construction companies are resorting to misclassifying their workers as 1099 or independent contractors instead of employees in order to get out of paying payroll taxes and benefits.

Marek Brothers Systems, a Houston-based commercial interior construction firm, rightfully classifies its 2,000 workers as employees, which means "Marek pays the employer's half of Social Security taxes, pays unemployment insurance taxes, and provides employees a 401(k) plan and subsidized health insurance." Read more » about Houston Chronicle article points out the problems with misclassification

The Texas Workforce Commission (TWC) is considering interagency collaboration to step up enforcement of worker misclassification violations in Texas, a point they discussed in a meeting with construction industry leaders in December.

Misclassification occurs when employers wrongfully identify their employees as independent contractors by providing them with a 1099 form instead of the W-2 for employees or by paying wages in cash and failing to withhold taxes.  By misclassifying their workers, unscrupulous employers cut their costs by getting out of paying payroll taxes and fraudulently obtaining workers compensation policies for fewer workers than they actually employ.

When government agencies such as the TWC, the Texas Department of Insurance (TDI), the Texas Comptroller of Public Accounts and the Attorney General of Texas share information, they can improve enforcement efforts by identifying likely violations for more effective investigations.   Read more » about Texas Agencies Consider Collaboration