RELEASE: The Public Cost of Low-Wage Jobs in the US Construction Industry

FOR IMMEDIATE RELEASE
January 10, 2022

Contact:
Van Nguyen
vann@berkeley.edu, (415) 506-8054

UC Berkeley report: Almost 40% of construction workers’ families in the United States are enrolled in a safety net program

BERKELEY, CA. – A new report by the UC Berkeley Labor Center highlights the public cost of low wages and few benefits in some sectors of the construction industry in the United States. This national report is released today in conjunction with state briefs for Connecticut, Illinois, Pennsylvania, Texas, and Washington. 

In past decades, construction reliably provided middle-class jobs to workers without a college education, but this is no longer the case for many construction workers throughout the country. The study finds that 39% of the families of construction workers in the United States are enrolled in at least one safety net program—a higher rate of enrollment than that for all workers’ families—at an annual cost of almost $28 billion in public funds. Three times as many construction workers as all workers lack health insurance. 

“Throughout much of the construction industry, there has been a ‘race to the bottom’ as employers compete for jobs primarily by reducing labor costs. This is done by paying low wages, but also through wage theft, off-the-books employment, and misclassification of workers as independent contractors,” said study co-author Enrique Lopezlira, director of the Low-Wage Work Program at the UC Berkeley Labor Center. “All of these practices degrade construction workers’ ability to provide for their families, and that comes at a high public cost.” 

Construction is one of the largest and most vital industries in the United States, employing about 1 in 16 workers nationally. Just prior to the COVID-19 pandemic, construction contributed $904 billion to the economy, or 4.2% of U.S. gross domestic product. Despite the size and vitality of the industry, job quality for some construction workers has deteriorated to the point that they earn wages too low to make ends meet and therefore fall back on the public safety net to make up the difference.

The construction industry is bifurcated into low-road and high-road sectors, which have strikingly different working conditions. For many workers in many parts of the country, the construction industry provides family-supporting wages and benefits, good training, and safe worksites backed by workers’ compensation protection. The low-road sector of construction, however, features low wages, no benefits, exploitation, and often illegalities including wage theft and payroll fraud.

Study details and findings:

  • The report examines utilizations of the five largest means-tested safety net programs: Medicaid; Children’s Health Insurance Program (CHIP); basic household income assistance under Temporary Aid for Needy Families (TANF); Earned Income Tax Credit (EITC); and Supplemental Nutrition Assistance Program (SNAP).
  • Two out of five families (39%) of construction workers in the United States are enrolled in at least one safety net program to bridge the gap between their wages and the cost of supporting a family; this comes at an annual cost of almost $28 billion in public funds.
  • Working families in the construction industry are 26% more likely than all working families to participate in one or more means-tested safety net programs. 
  • Nearly one in three construction workers (31%) lack health insurance, more than three times the rate for all workers (10%).

“The high usage of safety net programs and lack of health care for many workers are clear indications of the poor wages and working conditions in a large part of the construction industry,” said study co-author Ken Jacobs, chair of the UC Berkeley Labor Center. “It underscores the importance of unions, responsible contractors, lawmakers and state agencies in setting and upholding strong labor standards.”

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The UC Berkeley Center for Labor Research and Education (Labor Center) is a public service project of the Institute for Research on Labor and Employment (IRLE) at UC Berkeley.