The Losses Keep Mounting

More than $8.4 billion a year is lost to Construction Industry Employer Tax Fraud! Watch the losses climb, from Jan. 1, 2017 to now. 


Conquering the Crisis of Employer Tax Fraud

Across the United States and Canada, communities are alive with the sights and sounds of construction work on long-needed projects to repair and rebuild public infrastructure, not to mention the private development that an investment in infrastructure brings. Both countries have made federal investments that will transform economic development for decades.

The infrastructure boom can create life-changing career opportunities in construction. But that promise is threatened unless we conquer the industry-wide crisis caused by worker exploitation and illegal conduct.

That is why UBC regional councils and members are once again organizing events across the U.S. and Canada for Tax Fraud Days of Action, April 12–18, to educate policymakers, the media and the public about employer tax fraud in the construction industry.  

Too many construction employers use low-road business practices by illegally misclassifying workers as independent contractors and outright stealing wages. These operators also brazenly ignore tax and other employer obligations, all to win contracts with lowball bids, and gain higher profits.

Taxpayers are ripped off in the process and the price for workers is misery.

The University of California (UC) Berkeley Labor Center found that $28 billion in taxpayer funds are spent every year when some 3 million construction worker families must enroll in public safety net programs such as Medicaid and the federal nutrition assistance program.

(Read more about the UC Berkeley study here)  

Up to 2.41 million U.S. construction workers are illegally paid off the books or misclassified, according to an authoritative study, with annual estimated federal and state tax losses at some $8.4 billion. Employers steal nearly a billion dollars in wages every year—and dump their obligations to pay $3.5 billion in taxes onto workers’ shoulders.    

In Canada, the underground economy accounted for $61.2 billion of economic activity in 2018. In Ontario, $3.1 billion in federal and provincial tax revenue is lost to fraud every year. Quebec’s revenue losses come to $1.5 billion, and in British Columbia, taxes that go unpaid by independent operators reach $308 million. 

This low-road business model is rampant, but not because it’s popular.  In fact, one U.S. poll found that 84 percent of voters believed that misclassifying employees as independent contractors is a serious problem, and nearly 80 percent favored increasing fines and penalties for misclassification. Similar numbers expressed opposition to other low-road employer practices.

A problem this deep and wide isn’t easy to conquer, but the Tax Fraud Days of Action campaign is making a difference because of the work of UBC members and regional councils. In both the U.S. and Canada, UBC members are raising awareness, which leads to elected officials changing laws and beefing up enforcement.

But we won’t stop until we’ve cleaned up construction for good.

This April, join us in the fight.