By Charles Frantes
May 19, 2022
A recent presentation at the University of Saint Thomas in Houston highlighted how challenges associated with the outdated US immigration system have cultivated an inefficient, unethical, and unsafe shadow economy that threatens the sustainability of the construction industry. Stan Marek, CEO of MAREK, and Loren Steffy, award-winning author and business journalist, discussed how workforce shortages, the lack of a pathway for unauthorized immigrants to earn legal status, and the lack of enforcement against worker misclassification and payroll fraud have made it easier for unscrupulous employers in the construction industry to profit at the expense of law-abiding taxpayers, workers, and businesses. They called on lawmakers to pass a bipartisan ID and Tax policy as a solution.
In the construction industry where workforce shortages are rampant and competition for bids is fierce, Marek explained that one way that many companies cut costs is by classifying their workers as independent contractors instead of employees. Many businesses also pay workers off the books in cash. This allows those employers to avoid paying payroll taxes and providing benefits like health insurance and workers’ compensation. Doing this not only allows those employers to undercut and underbid companies that are following the rules, it also cheats taxpayers, and leads to a degradation of the trades due to a lack of emphasis on training and the treatment of workers as disposable.
Marek stressed the importance of the employer-to-employee relationship and the safety and skills training that comes along with it and explained how doing things the right way can actually end up saving costs in the long run and even help to alleviate rising housing costs.
“When you have a system where everybody is an independent contractor and you don’t have an employee to employer relationship, they don’t get the training that employees do. Our company prides itself on safety. Job sites are dangerous. Safety is number one, and then skills training. Somebody that is trained to do a specific function does it better. A big problem we have in construction is doing it twice. So many people, when they’re not trained, make a mistake and it has to be redone. It’s estimated 20-25% of projects have to be redone because people don’t have the skills training,” said Marek.