The Losses Keep Mounting

How much has been lost to Construction Industry Tax Fraud in the past year? Watch the losses climb, from Jan. 1, 2018 to now.


A Contractor Speaks Out: ‘A Bad Situation that Builds on Itself’

By Art Cortez
President, Harver Company
Owner, Art Cortez Construction

It’s hard for a legitimate contractor to stay afloat when we are forced to compete against other contractors’ bad behavior. It takes time and resources to bid projects, but we know that when we are bidding against cheating contractors it is unlikely that we will be awarded the job.

Just like everywhere else, it’s a big problem in Portland and in Oregon as a whole. I have testified in front of the state Ways and Means committee about how it has affected my business.

I am president of the Harver Company, which does mostly framing and drywall and has been in business since 1960. On a smaller scale I run my own commercial general contracting business, Art Cortez Construction.

In both companies we pay our crews negotiated hourly wages and benefits that are fair and reasonable. What we compete against are operators that pay workers in cash, per day. Maybe they’ll give some of their crew 1099 forms and tell them they are self-employed.

They’ll pay other workers strictly under the table; no benefits, no paperwork. They might pay their crew members $50 to $110 a day, in cash.

They are rarely reporting pay to the tax agencies. And on surveys that ask questions about underground wages, these contractors won’t answer—or they don’t answer the question correctly. That causes problems with the evaluation process and makes it look like there is no issue. Really, it is even more prevalent than we can prove.

I’ve seen big commercial jobs in downtown Portland where the project owners bypass general contractors and go directly to subcontractors, who hire workers they can pay in cash. These owners are bypassing the processes that legitimate contractors use, and the subcontractors win bids for important downtown construction that way.

There is no way for us to compete for that work. We have to be selective in choosing what bids we go for, based on that. Frankly, the system makes it difficult for us to pay the wages we are paying, and one hiccup can really hurt our business.

This is a bad situation that builds on itself. It brings the quality of the work down. And the public should know that we all end up paying more to cover the lost taxes. It impacts businesses, communities and individuals.