This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. ASSA Annual Meeting
  3. 2021
  4. Preliminary Program
  5. The Old Gig Economy: The Extent of Payroll Fraud in Construction, Its Cost to Society and Approaches to Its Regulation
« Back to Results

The Old Gig Economy: The Extent of Payroll Fraud in Construction, Its Cost to Society and Approaches to Its Regulation

Paper Session

Sunday, Jan. 3, 2021 3:45 PM - 5:45 PM (EST)

Hosted By: Labor and Employment Relations Association
  • Chair: William Canak, Middle Tennessee State University

Construction: The Old Gig Economy

Mark Erlich
,
Harvard University

Abstract

The issue of the misclassification of employees as "independent contractors" has become a major public policy discussion as a result of the extensive use of independent contractors by gig employers. But this business model long predates the emergence of the innovation economy; construction employers began shifting the classification of their trade's workers nearly fifty years ago as a method of reducing labor costs and union influence. The increasing use of an undocumented immigrant workforce in construction has become enmeshed with the practice of misclassification, resulting in a contemporary industry that, in many parts of the country, has been degraded in terms of compensation, safety standards, and union density.

How Widespread is Payroll Fraud?

Dale Belman
,
Michigan State University
Russel Ormiston
,
Allegheny College

Abstract

Measurement of the underground economy in construction is challenging and, at best, imperfect. We describe several methods before applying an approach which uses ACS, CPSA and BEA data and combines these with the estimates obtained from restricted IRS data. During an average month in 2017 between 12.4% and 20.5%, between 1.3 and 2.1 million individuals, of the construction industry workforce were either misclassified as independent contractors or working "off-the-books". Our estimated range is consistent with studies of misclassification based on state unemployment insurance audits.

New Gig Economy: Is it the New Model for Deregulation

Rebecca Smith
,
National Employment Law Project

Abstract

TBD

Modern Approaches to Regulating Misclassification and Off-the-Books Employment in Construction

David Weil
,
Brandeis University

Abstract

The rapid increase in misclassification and off-the-books employment in construction, and its spread from residential construction into the commercial, institutional, and industrial markets, poses increasing challenges to regulators. Current methods, that have been built on the norm of legal payroll employment and regulating based on employee complaints against individual subcontractors, are no longer effective. Legal limitations on liability of higher-level organizations, the evolution of institutional arrangements that support payroll fraud, and increased in the proportion of the workforce that afraid to approach government regulators makes case-by-case enforcement ineffective. Based on recent federal and state experience, effective regulation requires coordinating information gathering across state and federal agencies, a more rigorous enforcement of the ABC rule and moving the focus of responsibility and enforcement upwards from impermanent subcontractors to developers, owners and major contractors with a more permanent place in the community and economy
Discussant(s)
Matthew Capece
,
United Brotherhood of Carpenters and Joiners of America
Katharine Abraham
,
University of Maryland
JEL Classifications
  • J8 - Labor Standards: National and International
  • J1 - Demographic Economics