N.Y.C. ‘Underground’ Construction Economy Costs Workers and Taxpayers

by Mike Hall, Dec 23, 2007

In New York City’s booming construction industry, at least 50,000 workers are misclassified by employers as independent contractors or are working off the books—costing workers lost wages and benefits and local, state and federal governments nearly $500 million in 2005. A new report says that without tougher enforcement of employment and wage laws, the cost could jump to as much as $557 million next year.

Building up New York, Tearing Down Job Quality, released this week by the Fiscal Policy Institute (FPI), estimates nearly a quarter of the city’s 200,000 construction workers are part of the growing “underground economy.”

Says report author and FPI deputy director James Parrot:

Official figures don’t reflect activity of a growing number of unscrupulous employers skirting the law. Taxpayers are forced to pick up the tab for Social Security and other payroll taxes that go unpaid when construction workers are hired off the books. And law-abiding employers are put at a real disadvantage, forced to bear many costs shifted to them from employers breaking the law.

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