Capitol Notebook: Iowa Construction Labor Practices Under Scrutiny

A recent report has highlighted troubling labor practices in Iowa's construction industry, suggesting that at least 10% of workers were wrongly classified as independent contractors rather than employees in 2022. The report, released by Common Good Iowa, a nonprofit focused on workforce and quality of life issues, also uncovered widespread wage theft in the state’s construction sector, where around 5% of Iowa’s workforce is employed.
The report, authored by policy analyst Sean Finn, revealed that 12,000 construction workers were misclassified, leading to an estimated $43 million loss in wages, as well as millions in avoided state and federal taxes, including income, Social Security, and Medicare. Finn described the situation as the creation of "an underground economy" over the past decade, where enforcement of labor standards has been "disturbingly low" and penalties for violations are minimal.
Finn emphasized the urgent need for legislative action, suggesting lawmakers update Iowa's wage payment collection laws and require labor brokers to register with the Iowa Department of Inspections, Appeals, and Licensing. Currently, brokers can avoid registration by arguing they only provide labor. He noted that workers misclassified as independent contractors are ineligible for unemployment benefits and are often left without workers' compensation coverage for injuries.
The report also highlighted a potential boost to Iowa's construction industry due to federal funding from the Inflation Reduction Act and the bipartisan infrastructure law. These funds will come with pro-worker policies, including prevailing wages and registered apprenticeship programs, which will create thousands of good union jobs.
To address the labor issue, Common Good Iowa is urging lawmakers to allocate more resources for enforcing labor laws and to repeal state provisions that prevent local governments from passing laws to benefit workers. Finn stressed, “The state employs four investigators to oversee wage payment collection for a workforce of 1.6 million. That’s not nearly enough.”
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