Robert F. Bukaty/AP Photo
Wage theft, often perpetrated by subcontractors hired out by construction companies to avoid accountability, permeates every sector of the construction industry.
“I am a daughter of a construction worker and independent contractor! I grew up in a home where sometimes we had what we needed, but many times we did not,” Monica Bravo said through a megaphone. She was perched atop a clunky pickup truck adorned with banners and picket signs in Minneapolis, outside of a construction site owned by Yellow Tree, a real estate developer. A Midwestern summer sun blazed over her head as traffic hummed in the background.
Bravo, the executive director of the West Side Community Organization, alongside a coalition of workers’ rights advocates, union organizers, and general laborers, was there to protest poor working conditions within the construction industry. Their caravan would soon make its way into the heart of downtown Minneapolis to protest other build sites where blocky, five-on-one condominiums were under construction.
Bravo accused the firm, alongside a slew of other Minnesota real estate companies, of ignoring chronic concerns over safety, sexual harassment—and, most urgently, rampant wage theft.
“That was five decades ago,” Bravo continued. “And we have families today still facing wage theft while the construction industry is booming with millionaires and multimillionaires—all at the expense of exploiting the families that are working for them.”
Bravo was not exaggerating. The construction industry in the U.S. runs on wage theft. One study found that in Illinois, Wisconsin, and Minnesota, almost 1 out of every 5 workers suffer from payroll fraud. Another study focused specifically on Minnesota construction found a rate of 23 percent.
One study found that in Illinois, Wisconsin, and Minnesota, almost 1 out of every 5 workers suffer from payroll fraud.
Minimum and overtime wage violations, specious deductions from paychecks, and misclassifying workers are all common tactics that Rust Belt construction firms and their subcontractors use to cut back on labor costs. Despite the brief impact of the COVID-19 lockdown, residential construction revenue in the U.S. is continuing on an upward trend—the size of the North American construction sector is set to reach $2.4 trillion by 2030.
In June of this year alone, domestic construction spending totaled $1.76 trillion.
This thievery, according to the Midwest Economic Policy Institute, costs taxpayers in these states $362 million each year. Similar levels are found on a national level, where everywhere from San Diego to Washington, D.C., sees a persistent flow of complaints and dollars extracted from workers.
The industry’s labor force is chronically unorganized, undocumented, and obstructed from legal recourse. As such, subcontractors can exploit atomized workers while their hiring firms can claim they had no knowledge of the conduct, leaving their precarious workforce economically and legally stranded.
Without political power or judicial leverage, atomized construction workers often have no means for resisting this subtle form of robbery.
That’s how Daniel Sanchez felt when he realized he had had over $100,000 worth of wages stolen from him over the course of two years. An immigrant laborer from Minnesota who has worked for both large national property development firms like R.J Ryan Construction and smaller, local ventures like Doran Companies, Sanchez has spent the past ten years cleaning and maintaining construction sites.
While working at a site in 2021, Sanchez was unofficially anointed by a subcontractor to manage the funds that would pay the wages of his workers and himself. But when he did the math, he realized there wasn’t enough to go around for the five laborers under his charge.
“The idea would be that he’d give me enough money to cover all of our expenses. Frequently, there wouldn’t be enough, and I would end up having to pay what was owed,” Sanchez explained through a translator.
But despite his protestations, the subcontractor hired out by his employer insisted there was adequate pay for everyone involved with the project. Rather than have every employee take a pay cut, Sanchez fell on the sword and received very little compensation for his work.
“So many times I spoke to him. I even gave him my journals where I was keeping all of my information. It had dates, hours paid, and hours worked, but he acted like I was crazy,” Sanchez said. As a result of over two years of wage theft, Sanchez is now bankrupt.
“I [borrowed] money so I could get my costs in order. I have to pay my car payment, my rent, and my other bills. I had to send money to my family. But what was really painful for me was that my mom died recently, and when she died I wasn’t able to give her the funeral that I wanted to give her,” he said.
Sanchez says wage theft, often perpetrated by subcontractors hired out by construction companies to avoid accountability, permeates every sector of the industry’s blue-collar work: From painters to post-construction cleaners, subcontractors that manage sites provide massive, million-dollar firms with an excuse to feign ignorance of labor malpractice.
It isn’t just wage theft, either. Construction subcontractors routinely expose their workers to physical danger, prioritizing speed over safety and demanding long hours for low pay. As the Prospect has reported, Latinos often have it worst, with employers exploiting language barriers, the need for work, or the threat of deportation against undocumented workers to muffle any complaints about wages or dangerous conditions. Sanchez compared their relationship with subcontractors as being not unlike that of chattel and overseer.
“When developers are bidding, they’re looking for the quickest, most available option,” Sanchez said. “And when you’re in a system where the developers and subcontractors are looking for the cheapest bid, they’re gonna end up either not paying their workers or having other worker rights issues on their worksites because of the nature of the industry.”
But workers, Sanchez says, are well aware of how consistent this form of exploitation is. “It’s a pretty tight-knit community, and we do speak a lot. On Facebook, there are many construction workers who post about different companies because they didn’t pay them. And it’s never just one. It’s so, so many companies,” he said.
“I would see these posts, and I would wonder if this would happen to me one day, and then it did.”
Even with its ubiquity among the national workforce, state attorneys have failed to effectively prosecute this industrial-scale pilfering. Indeed, according to an investigation by Politico, 32 states have anywhere between nine and zero minimum-wage violation investigators.
While local municipalities, specific district attorneys, and individual states have beefed up enforcement and investigations, the federal response to the problem has been lackluster. The Department of Labor’s Wage and Hour Division (WHD) has seen a substantial decline in resources and staffing: From fiscal years 2010 through 2019, WHD saw its roster of investigators fall from 1,035 to 780.
This makes private lawsuits—often arduous, expensive, and out of reach for many undocumented workers—the main outlet for due process. And such actions are typically mediated through forced arbitration, resulting in significantly less compensation and damage payments for workers.
“A lot of these companies who violate wage theft laws see this as a cost of doing business, because the civil monetary penalties that are currently in our labor laws, specifically, in this case, the Fair Labor Standards Act, are so low,” explained Margaret Poydock, a policy analyst at the Economic Policy Institute.
“They only go up to about a little bit over $2,000,” she continued. “Sometimes cases don’t even get fines. I would say there’s no teeth to it.”
Poydock and her colleagues authored a 2021 study that found that only $3 billion in stolen wages had been recovered for workers between 2017 and 2020—about a fifth of the annual amount stolen by employers.
The Worker-Driven Social Responsibility approach is designed for workers who might not have the option of forming a union.
The question is, given the substantial number of American workers interested in organizing their workplaces, how labor—especially in sectors like construction with vulnerable workers—can collectively redress the pernicious act of wage theft.
The construction workers and organizers in Minneapolis who rallied with Sanchez and Monica Bravo seek to provide more immediate relief for non-union workers by implementing a Worker-Driven Social Responsibility (WSR) model on their sites. WSR recognizes that when government agencies fail to enforce labor laws or private firms adopt “corporate social responsibility” pledges for show, it is often because little worker input was included to begin with.
While the most obvious solution would be to organize a union, the WSR approach is designed for workers who might not have that option. For example, farmworkers, who originally designed the WSR program, are excluded from the National Labor Relations Act. As a result, it is extremely difficult for them to ratify a union vote.
Using boycotts, protests, and pressure from shareholders, workers can leverage large brands to sign on to a WSR agreement.
The WSR places workers directly in charge of safety, dignity, and fair payment: Employees form a workers’ organization that will monitor and enforce labor laws in their workplace, and, in turn, corporations sign legally binding agreements that require subcontractors or other firms in their supply chain to abide by specific standards.
These standards are then enforced by the workers via workplace audits and educating co-workers on their labor rights. Failure for those at the top of the supply chain—the buyers of, say, tomatoes or garments—results in economic repercussions like boycotts and the public exposure of buyers and sellers alike.
“At the center of the code is a strict no-retaliation policy so that workers can not only learn about their rights but sort of lead in the defense of their rights, watch out for what’s happening with their neighbor, call the complaint line, do that work,” explained the Rev. Doug Mork, executive director of the Building Dignity and Respect Standards Council, an offshoot of the WSR model designed specifically for the Twin Cities’ construction industry.
This bodes well for workers like Daniel Sanchez, who expressed concern that speaking out against the subcontractor that robbed him had hurt his ability to get work on other construction sites.
The council is a part of the broader WSR network that includes farmers in Florida, dairy laborers in Vermont, and textile workers in South Africa and Bangladesh. Some of the workers Sanchez organized with even went to Immokalee, Florida—where disaffected migrant farmers first conceived WSR—to learn how to transform the standards of their own industry.
Gerardo Reyes Chavez was one of the Immokalee workers who developed the WSR method over the course of two decades, and he credits the influence of the model to coalition-building: students, churches, and worker organizations and centers all helped bring the buyer of the tomatoes he farmed, Taco Bell, to the table.
“Establishing those connections and bringing the stories of the fields to consumers all over the country so they could support us and create power. That’s how it’s been done,” Chavez said of how the Coalition of Immokalee Workers clamped down on wage theft, child labor, and sexual assault in their fields.
“These companies need to respect the law. It all begins with that. This country prides itself on being a law-abiding country, and that’s supposed to be the case even when you’re a worker, you’re poor, and you are from a marginalized community.”
