Paving the High Road
Opportunities and threats shaping the future of Iowa’s construction industry
Executive Summary
by Sean Finn
December 10, 2024 | Download PDF of full report | News release
Iowa’s construction workforce forges the state around us. Workers spend long hours in the heat and cold to keep our communities moving and growing. Now more than ever, with unprecedented federal investments in infrastructure flooding into the state, we must ensure the industry’s growth benefits the people doing the work and the communities where projects are being completed.
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.
Under ideal conditions, contractors using illegal practices would be identified and penalized, allowing the law-abiding businesses with good practices to be awarded contracts to complete the projects responsibly. But for many years, we have 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 the growing culture of low-road practices in the industry, leading to worse outcomes for workers, families and communities.
Together, these trends represent serious threats to Iowa’s construction industry:
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Wage theft and illegal employee misclassification — treating workers like independent contractors, thereby removing their employee rights and protections — affect at least 12,000 Iowa construction workers and cost them over $100 million each year.
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State and federal agencies together recover less than 0.1% of the wages stolen from Iowa workers each year. Enforcement data show the average amount recovered for all construction workers each year is around $33,000.
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Workers in the construction industry are more likely than the average Iowa worker to earn low wages, experience financial insecurity, and rely on public assistance like SNAP and Medicaid. Around 17% of Iowa families supported by construction workers had household incomes under 200% of the Federal Poverty Level (FPL) or about $62,000 for a family of four.
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Abuse and exploitation of construction employees is rampant, especially for Iowa's immigrant workers who make up a large portion of the construction workforce. They are 45% more likely to experience minimum-wage violations than non-immigrant workers.
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Since 2017, Iowa law has restricted the ability of local governments to improve labor standards for public works. That is when the Legislature prevented cities and counties from adopting minimum wage, prevailing wage and project labor agreement laws.
Although the threats are real, there have rarely been more promising opportunities for the Iowa construction industry than now. Iowa is expected to benefit from billions of dollars in Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL) spending over the next ten years.
This federal funding is attached to strong pro-worker policies like prevailing wages and registered apprenticeship requirements. These “good jobs” provisions can help turn the tide for industry culture, creating incentives for high-road contractors and higher standards for public works. National trends of increasing unionization and more favorable views of unions also bode well for the industry, as high union density is associated with better outcomes for workers and communities alike.
Strong state and local policy choices can push the industry in the right direction:
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Iowa stands to benefit from at least $6.9 billion in transportation infrastructure investments from the BIL and $25 billion in investments generated by IRA funding and tax credits by 2030. But leaders, both public and private, must act to take advantage of these opportunities.
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Many components of IRA and BIL funding are tied to meeting prevailing wage and registered apprenticeship requirements, which increase the number of jobs going to local workers, keep down overall project costs to the public, and improve economic conditions for workers and their families.
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Some IRA and BIL opportunities provide additional incentives for adopting practices that maximize benefits to communities, promote project efficiency and set standards for local jobs: project labor agreements, community workforce agreements, and community benefits agreements.
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Although union density in Iowa’s construction industry declined under years of anti-union governing, federal funding opportunities that incentivize labor standards are helping quality unionized contractors compete on a more level playing field. They are promoting more openings for workers seeking to join construction unions to find jobs with higher wages, health and pension benefits, training opportunities and safe work sites.
As strong federal policy shapes the direction of Iowa’s construction industry, with an emphasis on good jobs, it’s time for local and state governments to do their part. Cities, counties, state agencies and legislators all have options for advancing fair, responsible industry growth.
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Local leaders must take responsibility to protect workers by educating local law enforcement, County Attorney offices and the working public on how to combat illegal misclassification and wage theft.
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State agencies should use their powers to establish and enforce rules that hold low-road contractors accountable and protect vulnerable workers from abuse and retaliation.
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The Iowa Legislature must create a legal environment that prioritizes worker well-being and high-road practices. The state needs to enact stronger laws against cheating employers, properly fund enforcement and outreach and open the door to policies that promote good jobs.