Victor White

Guest columnist

Victor White is the director of business development for the Southeastern Carpenters Regional Council.

In November, a seldom-covered but far too common crime surfaced in Nashville’s news media: the case of wage theft at a Metro Nashville Public Schools-funded construction site.

A subcontractor working on the project allegedly refused to pay a local group of concrete workers, robbing them of $43,000 in wages for their work at a local school. These laborers have been calling attention to the theft for weeks and finally brought their case to MNPS at a school board meeting.

Members of the Southeastern Carpenters Regional Council were proud to stand with our brothers fighting for fair wages at the meeting, but the problems we face in the construction industry go well beyond one case of wage theft in Nashville.

Fraud is rampant across construction industry

The construction industry today is fundamentally built to allow rampant payroll tax fraud, wage theft, workers’ compensation premium fraud and worker misclassification. At each construction site a general contractor hires a subcontractor to manage different jobs: laying drywall, putting down concrete, or installing plumbing and lighting. Each of those subcontractors hires a labor broker to recruit a team of workers to get the job done. Each subcontractor competes for bids, promising they can get the job done for the least amount of money.

Many subcontractors recruit labor brokers they know will cut corners and trim costs. Sometimes, as in the case of the concrete workers, the subcontractor will fail to pay laborers and outright steal their wages. Other times subcontractors will classify workers as independent contractors, committing payroll tax fraud by avoiding paying taxes on their employees. These schemes cause law-abiding construction employers to suffer as they are underbid by rivals who keep costs down through breaking the law.

Hear more Tennessee Voices: Get the weekly opinion newsletter for insightful and thought provoking columns.

Each year Nashville and Tennessee taxpayers lose out on significant tax revenue as workers cannot freely spend money they have not received.

I’ve been in the construction business my whole life. I’ve seen how Nashville has grown and transformed, and I’ve watched as the construction industry has spiraled out of control. I’ve seen workers get their wages stolen, not get paid overtime, and I’ve seen subcontractors commit fraud in broad daylight. Thanks to the fractured nature of the industry each layer shields itself from liability, and general contractors worth millions of dollars continue to rake in money from state, municipal and private organizations.

The worst part is that our local and state leaders are, or should be, well aware that this widespread fraud happens every day, yet they fail to take action to prevent it or to implement any form of oversight.

According to some estimates, $2.6 billion in payroll tax fraud is lost annually. In Nashville alone, as of 2015, construction projects totaled $2 billion. In a report by the Workers’ Defense Project in 2017, 45% of construction workers in the South reported they did not have workers compensation. Workers who reported wage theft lost a median of $800.

A false prosperity

Beyond the rampant fraud that is allowed to continue, the lack of oversight and regulation on construction sites in Nashville led to the largest rise in construction-related deaths over a 2-year period than any time in the last 30 years.

While the high and mighty in Nashville might want you to look at the dozens of cranes in the sky and think of growth and prosperity, to those of us in the business each crane is a symbol of millions of dollars lost in wages and tax revenue, all while top corporations get richer.

The Carpenters call on our local and state government to get off their hind quarters and finally end fraud in the construction industry.

Victor White is the director of business development for the Southeastern Carpenters Regional Council.