Standing up for Iowa workers

When the road is out, the roof is leaking or the trees are down, the construction and repair crews are the heroes everyone hopes to see. Long hours, heat, cold – no matter, they show up, and we appreciate them.

So why are we hearing so little about the way they’re treated day-in, day-out? Do we care if they are paid? Their safety assured? Do we care if the companies that employ them are honest not only with them but the people paying the bills – in many cases taxpayers?

In recent years, much of Iowa’s construction industry has devolved into a race to the bottom. Low bidders win contracts, and those low bidders are increasingly likely to be low-road contractors who cut corners and break the law to get ahead. As a result, far too much public tax money and enforcement leniency go to law-breaking, non-local construction contractors.

Our new Common Good Iowa report, “Paving the High Road: Opportunities and Threats Shaping the Future of Iowa’s Construction Industry,” puts a spotlight on the trends that threaten a thriving construction industry in Iowa:

• Wage theft and illegal misclassification cost at least 12,000 Iowa construction workers over $100 million each year.

• Low-road contractors increasingly use payroll tax fraud and under-the-table labor brokers to illegally cut labor costs and underbid responsible contractors.

• State and federal agencies together recover less than one-tenth of 1% of the wages stolen from Iowa workers each year – only $33,000 total on average in construction.

• Industry workers earn less than the average Iowa worker and are more likely to experience financial insecurity and need support from SNAP and Medicaid.

• Immigrant workers in Iowa, a large share of the construction and disaster-recovery workforce, are 45% more likely to experience minimum-wage violations than their fellow non-immigrant workers.

• Iowa law now bars local governments from adopting minimum wage, prevailing wage and project labor agreement laws when state law is weak.

Notably, these challenges converge with good policy examples that can set a high-road course to prevent the abuse and exploitation of construction employees and especially immigrants.

Those examples come in federal initiatives to boost the economy in the wake of the COVID pandemic – the Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL). Iowa is expected to benefit from billions of dollars in IRA and BIL spending and induced investments that come with some pro-worker strings attached. These include prevailing wage rules and use of registered apprenticeships, both of which have been shown to boost local economies and enhance accountability to taxpayers.

These provisions give Iowa an opportunity to improve industry culture for high-road contractors and demand higher standards for public works. The investments will create thousands of good union jobs, which set a strong standard of safety and compensation, and train the qualified workforce of the future through registered apprenticeship incentives.

These examples also come, by the way, as the right-wing Project 2025 agenda looms in the wake of the 2024 election – with threats to several IRA tax credits for developing renewable energy with local jobs and provisions that would undermine work life, gutting overtime pay requirements and standards that guard against wage theft.

In an ideal world, contractors using illegal practices are identified and penalized, with law-abiding businesses awarded contracts to complete public or private projects responsibly. But for many years, Iowa has not experienced ideal conditions.

Enforcement of labor standards is disturbingly low and meaningful penalties for violations are basically nonexistent. When government surrenders that role, it contributes to low-road practices in the industry, leading to worse outcomes for workers, families and communities.

Federal investments in infrastructure offer more than a short-term economic boost. They can turn us toward a better understanding of how everyone benefits when expectations and standards are raised.

Iowa’s construction industry has a future full of opportunities, including millions in federal funding, but state leaders must act to take advantage of them and protect the interests of the industry and its workers.

Sean Finn is a policy analyst at Common Good Iowa and author of a new report, "Paving the High Road: Opportunities and Threats Shaping the Future of Iowa’s Construction Industry." Contact Sean at sfinn@commongoodiowa.org.