Yesterday and today, NPR's Wade Goodwyn did a two-part series on shocking practices in Texas's construction industry. At least, it should be shocking to anyone from outside the Lone Star State. Lately, it's been possible to get a lot of house in Texas for a little bit of money. For instance, five-bedroom houses in Fort Worth can go for as little as $160,000. But Goodwyn found those cheap prices are possible in large part due to an industry where disregard for the law and workers' rights has gotten to the point where it's nearly impossible to stay in business if you want to do things legally.
In Part 1, we found out that Texas' construction workers--almost half of whom are undocumented immigrants--are getting screwed eight ways to Sunday by wage theft.
The economic collapse of 2008 brought with it an onslaught of wage theft, according to the Austin-based Workers Defense Project. At the end of the week, construction workers sometimes walk away with $4 or $5 an hour, sometimes less, sometimes nothing.And that's just those who are willing to talk. Many more workers are afraid to complain for fear of being deported.
"Ninety percent of the people who come to our organization have come because they've been robbed of their wages," says Cristina Tzintzun, the Workers Defense Project executive director.
The organization has co-authored a report with the University of Texas, Austin, that examines working conditions in the Texas construction industry. For more than a year, WDP staff and University of Texas faculty canvassed Texas construction sites, surveying hundreds of workers and gathering information about pay, benefits, working conditions and employment and residency status.
Cheated workers keep working, Tzintzun says, because contractors dangle wages like bait from one week to another, paying just enough to keep everybody on the hook.
Many of these workers are also getting little or no pay to work in the most unsafe conditions in the country for construction workers. The WDP-UT study found Texas construction workers die at a rate of 10.7 deaths for every 100,000 workers, more than the national average and more than double that of California's 5.2 deaths. Also, Texas is the only state without mandatory workers' comp, meaning that when workers go to the hospital, taxpayers end up footing the bill. Considering one out of five Texas construction workers ends up in the hospital, that can add up.
A lot of contractors aren't just cutting corners on safety. They're cheating the government out of tax revenue by illegally classifying their workers as independent contractors rather than employees.
It works like this: Pretend you're an interior contractor, drop by the Home Depot parking lot and pick up four Hispanic guys to install Sheetrock for $8 an hour.According to part 2, though, if you want to run a construction business in accordance with the law and basic decency--that is, pay your workers decent wages and pay all your taxes--it's next to impossible to stay in business. Stan Marek, owner of one of the largest contractors in the state, puts it bluntly--"There's no way you can compete."
By law, these men are your employees, even if just for the day. But in Texas, as in many other states, it's popular to pretend they're each independent contractors — business owners. Which means you are not paying for their labor but for their business services.
With this arrangement, the contractor — you — don't have to pay Social Security taxes or payroll taxes or workers' compensation or overtime. Instead, you pretend the undocumented Hispanic worker you've just paid in cash is going to pay all those state and federal taxes out of his $8 an hour himself.
"Our estimation is that there's $1.6 billion being lost in federal income taxes just from Texas alone," says the Workers Defense Project's Tzintzun. The report estimates that $7 billion in wages from nearly 400,000 illegally classified construction workers is going unreported in Texas each year, resulting in billions of dollars in revenue lost owing to institutionalized statewide payroll fraud.
Goodwyn also talked to "Trent," the owner of a landscape construction company, who openly admits he improperly classifies his workers as independent contractors. He also may be cheating them out of wages--his workers get paid a fixed amount per project in cash, and don't get more if things run behind schedule.
Sounds to me like the Texas real estate market is like Walmart--you may be getting things cheap, but in truth the price is way too high.