A new research brief by the UC Berkeley Labor Center highlights the public cost of low wages and few benefits in some sectors of the construction industry in Arizona. Modeled after a national report released earlier this year, this brief is released today along with ones for Georgia, Michigan, Nevada, New Hampshire, New Jersey, New York, Oregon, and Wisconsin.
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 Arizona. The study finds that 45% of the families of construction workers in Arizona are enrolled in at least one safety net program—a higher rate of enrollment than that for all workers’ families in the state—at an annual cost of $700 million in public funds. Almost 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 a large and vital industry in Arizona, employing about 1 in 14 workers statewide. Prior to the COVID-19 pandemic, construction contributed $18.8 billion to the economy, or 5.1% of Arizona’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).
- Almost one out of every two families (45%) of construction workers in Arizona 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 more than $700 million in public funds.
- Working families in the construction industry are 41% more likely than all working families to participate in one or more means-tested safety net programs.
- One in three construction workers (36%) lack health insurance, almost three times the rate for all workers (13%).
“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.”
Founded in 1964, the UC Berkeley Labor Center works to address the most critical challenges affecting working families in California and across the nation. The Center provides timely, policy-relevant research on labor and employment issues and carries out training and education programs for labor leaders and students.