The Consequence of Colorado’s Construction Labor Shortage

The state’s high demand for skilled workers invites improperly regulated opportunities for worker exploitation

It’s no secret: Colorado’s growth is booming. A low unemployment rate, a swelling population and a red-hot housing market make the Centennial State a desirable place to live and work. However, Colorado is facing one serious issue: a construction labor shortage that is not being immediately addressed. The demand for skilled labor workers is leaving the door open for workplace safety violations, sexual harassment, fear, wage theft and discrimination.  


WHY THE SHORTAGE?

The perfect storm of an aging workforce and substantial layoffs of skilled workers during the recession who never returned, a lack of affordable housing and the growing demand for skilled workers to meet the needs of a flourishing housing market have all contributed to the shortage of construction workers. And Colorado has one of the highest housing demands in the U.S. The state’s population, as a whole, is expected to balloon to over 7 million people by 2035, which means roughly 17,000 new homes — per year — will need to be built in order to keep up with the growth.

But the more important piece of the puzzle is that the high demand for skilled construction laborers is inviting unnecessary opportunity for worker exploitation. The labor market is not functioning as it should, which invites lawsuits and violations such as discrimination, sexual harassment and wage theft, said David Seligman, director of Towards Justice. 

“When there is labor shortage, and everyone in construction claims there is one, in a functioning labor market we should see wages go up and improved working conditions,” he said. “We’re not seeing those things, which suggests to me that this labor market is not functioning the way it ought to.”

Seligman added that employers aren’t necessarily painted into a corner, either. “Our marketplace should respond. If there is truly a labor shortage, our market should respond with better wages and better working conditions. That’s how a labor market is supposed to respond to shortages, and it’s what we have seen historically in other markets. Instead, we are seeing the opposite,” he said.

WAGE THEFT

The state has seen a sharp increase in wage theft in the construction field as the industry has boomed. According to Towards Justice, wage theft is one of the most under-policed crimes in Colorado. The organization notes that in 2014, the Colorado Fiscal Institute estimated that $750 million in earned wages was stolen from Colorado workers each year. Towards Justice also cites The Economic Policy Institute, which estimates that “wage theft could be costing low-wage workers $50 billion a year nationwide. This is criminal misconduct of a staggering scale; to put this number in perspective, reported robberies, burglaries, and auto theft in 2012 amounted to around $12 billion in losses.”

But it’s not just wage theft that is the problem and a serious consequence of the state’s labor shortage, he added. “There are lots of worker’s violation, which are quite common in this industry including sexual harassment, discrimination and workplace safety violations.”

SEXUAL HARASSMENT

Sexual harassment is generally quite common in low and moderate wage workplaces, Seligman said. And although some employers in Colorado — and nationwide — are taking steps to hire more women in construction jobs, the causes of sexual harassment are universal and will continue to increase. 

“I think that [hiring more women] is part of a concerted effort by lots of folks to make sure this is an industry that is open to more women when it has not been historically,” Seligman said. “I think there has been an uptick in sexual harassment, but I wouldn’t say the increase in women has caused it. The causes of sexual harassment are systemic and unless we address them, sexual harassment will continue to exist.”

IMMIGRATION AND FEAR

Another consequence of the labor shortage and the Trump administration’s crackdown on immigration is a rising fear from both undocumented and documented workers. The administration’s crackdown on immigration has many immigrants scared to negotiate better wages and working conditions, which is a problem all in its own, Seligman said. 

“We’re seeing massive fear among undocumented immigrants and immigrants who have documents. What fear does is undermine worker bargaining power and creates more space for exploitation,” he said. “It’s bad for workers and it’s bad for businesses who follow the law and pay their workers what they’re owed because it creates space for irresponsible employers to come in and exploit people who are would be in a position where they feel like they can’t assert their rights worth.”

Seligman adds that some employers, of course, treat workers the way they should be treated and pay lawful wages, but he said there are lots of employers who see a competitive advantage to shaving labor costs and exploiting workers so they can get more out of them and reduce their bargaining power. 

“They see that as getting them as an advantage and getting more and better contracts,” he said. However, with new efforts aimed to combat worker exploitation and address the labor shortage, there is hope. 

THE STATE’S EFFORT

In June, Gov. John Hickenlooper signed an executive order creating a joint task force to better address payroll and worker misclassification in Colorado’s construction industry.

And although not all of them are guilty of doing so, some labor brokers within Colorado’s construction industry have been found “to have purposefully misclassified workers to avoid paying unemployment premiums and payroll taxes.”

“Law-abiding companies and workers are being undercut by those who skirt the law in Colorado,” said Hickenlooper in the June press release. “This task force will bring all parties together to find the right solutions to root out any illegal labor activity in our state.”

The Joint Enforcement Task Force on Payroll Fraud and Employee Misclassification in the Construction Industry will coordinate with applicable state agencies to share information and streamline investigations around alleged misclassification of workers. The task force also will coordinate with business, labor and community groups. However, the task force is in its early stages and the state has yet to see the benefits of such a group and as Seligman argues, there are plenty of actions that can be taken in the meantime. 

“The city is getting started in those efforts so we are optimistic about what’s possible from the City of Denver. Hopefully it can raise the profile of workplace injustices in the construction industry,” Seligman said. 

HOPE FOR THE FUTURE

The most important possible innovation we can see in this area and just broadly when it comes to workplace justices has much less to do with substantive protections and much more to do with enforcement, Seligman said. 

“The problem is that there are not nearly enough resources and appetite out there for public enforcement. There’s not nearly enough appetite for public enforcement from the AG’s office and city attorney’s offices, and Colorado Department of Labor and we need more. Also, there are lots and lots of increase impediments to private enforcement,” he said.

“So, we’re relying more on public enforcement yet the resources, the expertise and the appetite isn’t quite there yet from public enforcement,” he said. “But we’re optimistic that that can happen and that’s what Towards Justice is working with public enforcers to help make that happen.”

— Sarah Green

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