Introduction

We get to the job-sites, we sign into Metro Walls’ sign-in sheets. That’s what you do, we’re on their payroll, supposedly. I never got hired by Metro Walls. When we are on the site, if any OSHA [staff] or any person outside of the site comes through and asks us, we got to say we work for Metro Walls. I’ve seen people get fired for saying that they work for the subcontractor.¹ Sometimes the company already has a name for you to sign in with. What they’re doing is they’re rotating guys sometimes that are on their payroll, and using their names over here, or using them over there, just to try to make some sort of paperwork on these jobs.² —Jonathan Nuno, carpenter

These poor workers [at the North Square Apartments built by Beacon Communities]—working for five weeks with the promise that they would get paid. One of the women—she’s a single mom who came from Honduras—she was devastated because she’s two months behind on rent. She’s got a kid. She’s got a babysitter she can no longer afford. So she was there in limbo, “Please help me. I really need the money.” Now, because the single mother can’t pay her rent, it makes it seems like the workers “are the bad people now.”³ —Ricardo Xavier, NASRCC organizer

Trouble in residential construction is not new in Massachusetts.⁴ A 2004 Harvard University study found that between 14% and 24% of Massachusetts construction workers were illegally misclassified as independent contractors. No longer considered employees, they weren’t covered by workers comp if hurt and couldn’t collect unemployment benefits if laid off. During the period from 2001 to 2003, between $1.03 and $3.9 million went unpaid into the unemployment insurance system by employers in the construction industry who illegally misclassified their workers as independent contractors; and underreporting the wages of these misclassified workers in the construction industry defrauded the state of $6.9 million in state income tax.⁵

Lacking a regular employer, these workers—many of them undocumented and among the most vulnerable in the Commonwealth—were frequently not paid overtime, cheated out of hours they worked, and sometimes not paid at all. A 2015 study of residential construction by the University of Massachusetts documented an epidemic in wage theft in residential construction in the Commonwealth.⁶ This was not just a problem in Massachusetts; national and individual state studies showed other states with similar levels of misclassification and the theft of wages.⁷

Reports from the field suggest that this jettisoning of direct employees and wage theft have dramatically escalated in the non-union residential construction industry in the Commonwealth, following the trend we have seen in much of the United States. To evaluate the extent of these problems, and the mechanisms by which illegal misclassification and wage theft are taking place, the North Atlantic States Regional Council of Carpenters (NASRCC) commissioned this study to take both a qualitative and quantitative look at the current state of residential construction in the Commonwealth.

The qualitative portion of this research is based on more than 60 in-depth interviews with both documented and undocumented workers, contractors, union and public officials, and community activists.⁸ Our goal was to gather information from a wide variety of individuals who have had very different experiences with, and perspectives on, residential construction, and thus be able to build a comprehensive portrait of what is happening in residential construction in the Commonwealth today. To focus this research, we looked primarily at the drywall sector of residential construction—the hanging and finishing of sheet rock in the interiors of living areas.

The results of these interviews are complemented by a comprehensive quantitative analysis of data provided by the Massachusetts Department of Revenue, Department of Unemployment Assistance and Department of Industrial Accidents that allowed us to develop statistical projections of the extent and economic costs of worker misclassification, wage theft and tax fraud in the Massachusetts construction industry.