Authors: Russell Ormiston, Stephen Herzenberg
Publication Date: January 11, 2019
This brief, buttressed by the companion national literature review by Professor Russell Ormiston of Allegheny College, presents multiple sources of complementary evidence that point to a single, simple conclusion: US and Pennsylvania labor law and labor standards are routinely violated by many contractors in the Southeast Pennsylvania regional construction industry. These violations threaten to transform growing shares of the construction sector-an industry that still provides significant numbers of well-paid jobs to highly skilled non-college workers-into low-wage, low-skill jobs, further undermining the region’s middle class and increasing already-gaping inequality.
Labor standards violations victimize workers and their families, taxpayers, law-abiding contractors, and construction customers including public sector entities.
* Workers get cheated of the pay they have earned and need to support their family.
* Local businesses suffer because lower-wage workers, some from outside the region, consume less.
* Taxpayers lose because worker victims of wage theft pay less in taxes. Taxpayers also lose in some cases because irresponsible contractors win public contracts awarded to low bidders and then use “change orders” to increase project cost beyond the original bid.
* As well as losing income, workers and their families may suffer because of injuries suffered on the job. Such injuries are more common among contractors who violate labor standards and, in some cases, rely on informal labor markets essentially outside the purview of labor law.
* Law-abiding contractors lose business and profits-and pay higher unemployment insurance taxes and workers compensation premiums-because their competitors underpay. Law-abiding contractors also face pressure to begin violating standards and cheating workers themselves-in a potential “if you can’t beat ’em, join ’em” downward spiral that spreads destructive competition.