|As we learned from a Stockton study in 2016, the underground economy in New Jersey’s construction industry has devastating effects on contractors, craft workers and the economic vitality of the state.|
Published On: Thursday, July 19, 2018
Authored By: Darlene Regina, Chief Operating Officer, Associated Construction Contractors of New Jersey
As we learned from a Stockton study in 2016, the underground economy in New Jersey’s construction industry has devastating effects on contractors, craft workers and the economic vitality of the state. Ethical contractors are forced to compete against unscrupulous players who cut costs by hiring off-the-books labor and misclassifying employees as independent contractors. The workers they hire suffer from a lack of safety training, unlivable wages and zero health and welfare benefits – and New Jersey’s skilled union craft workers lose out on the opportunity to work. Just as egregious, the state loses millions of dollars in revenue as the “bad actor” contractors cheat the Treasury of income and unemployment taxes.
Yes, millions. The Stockton report estimates up to $11 million lost because of unpaid income taxes on off-the-book employment, plus another nearly $9 million caused by misclassification. Unpaid unemployment insurance is estimated at $3.1 million to $6.7 million.
In June, labor, management and academia came together to present a panel discussion hosted by ROI-NJ on the plague of the underground economy (I represented ACCNJ on the panel). While we approach the issue from various viewpoints, we agree that strong enforcement of our existing laws will go a long way toward stopping the bad actors. Bringing in the lost revenue would be like winning the lottery – a much-needed infusion of cash to help solve the state’s budget crisis and fund construction projects in every facet of the public sector: highways, rails, bridges, schools, libraries…you name it.
We have renewed faith that the Commissioner of Labor and State Attorney General are pursuing tougher enforcement. We need to keep the dialog going with all our political leaders.
NOTE: ROI-NJ compiled a comprehensive review of the panel discussion....
ROI-NJ Panel Discussion Video
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