Reshaping the Construction Industry

Last Wednesday, Pennsylvania Governor Edward G. Rendell signed the Construction Workplace Misclassification Act, which adds Pennsylvania to the growing list of states passing legislation designed to eliminate the practice of worker misclassification by imposing criminal penalties upon employers who intentionally label their employees as independent contractors.  Like laws passed in other states, the new act spells out the criteria for classifying a worker as an independent contractor.  The act states that a person in the construction industry may only be paid as an independent contractor if that person has a written contract for service, is “free from control or direction” as to how to perform the service, and if that person normally performs the service as an independent business.  The new law makes it a criminal offense to misclassify workers, but also takes it a step further.

This week, nwiTimes.com (Northwest Indiana) wrote about a 2008 University of Missouri-Kansas City study which revealed the extent of worker misclassification and the resulting cost to state and local governments.  As in other states, the problem is noted to be widespread, especially in the Indiana construction industry.  Misclassified workers who don’t report all of their income and who go without unemployment and worker compensation insurance represent lost tax revenue for the state in an economy where all departments are struggling to reduce their budgets. Ironically, employers who misclassify their workers are often rewarded with government jobs because by breaking the rules they are able to submit lower bids for construction projects.  This is precisely why State Representative David Niezgodski is looking to strengthen Indiana laws to crack down on those employers who do not play by the rules. 

An article written by Nick Zieminski for Reuters on August 26, “Lack of skilled workers threatens recovery” captured my attention.  The article highlighted a research paper published by Manpower Inc., and quoted their Chairman, CEO and President Jeff Joerres as saying about the skilled trades shortage “It becomes a real choke-point in future economic growth.”Construction Citizen previously wrote about Manpower Inc., a global staffing and employment services company, and their assessment that strategic migration of workers will be part of the solution to the global skilled worker shortage.Another strategy is educating the younger generation and encouraging them to seek training for careers in construction.  

Central Houston, the key management and economic development organization for the Central Business District of Houston, at its annual luncheon, presented the Allen Brothers Award...