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Once solid, job safety net frays for construction work

Posted Thursday, Sep. 04, 2014  comments  Print Reprints
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At 19, Joshua Scott Lawson could see his future clearly.

He’d spend his days in the sun, building homes as other men in his family had a generation before. Each evening, he’d sit down to dinner with his middle school sweetheart, Amanda, and ask the children they would have about their day at school.

Over the past decade, Lawson watched his simple dream slip beyond his reach. He’s worked 14-hour days on construction jobs far from his home just outside Winston-Salem, N.C. By the time he made it home at night, his children were fast asleep. No matter how hard he worked, the pay could never cover the bills of his growing family.

“I thought if I grew up to build houses, I’d have a good life,” said Lawson, who’s now 29. “I about lost everything.”

Lawson entered the construction industry as the nation’s appetite for cheap and swiftly built housing intensified and the supply of eager immigrants willing to meet those demands exploded.

Somewhere in the middle were men such as Lawson: Americans with no professional degrees and little training but with expectations for a decent income. Just a generation before, construction work had kept millions of Americans nestled in the middle class.

During the past decade, the industry no longer offered a haven for the roughly 10 million Americans who could shingle roofs, paint houses and lay carpet. For nearly all construction trades, pay declined or held flat over the last 50 years, census data shows.

For some trades, such as drywall, average pay fell by nearly 60 percent. A carpenter in 2012 could expect to make just under $19,000, roughly the federal poverty level for a family of three.

As wages fell, so did security. To save money, some company owners moved employees such as Lawson off their payrolls, designating them as contractors. This deprived many of them of workers’ compensation insurance to cover their medical bills if they got hurt on the job. And for those months of bad weather and no jobs, workers cannot collect unemployment benefits to bridge the gap to better days.

A McClatchy investigation found that in Southern states such as North Carolina and Texas, more than a third of construction workers in the projects reviewed were treated improperly as independent contractors instead of employees.

A random survey of workers on federally funded affordable-housing projects in North Carolina suggests that as many as 46 percent of those treated as independent contractors are supplied no tax forms of any kind. Contractors should receive a 1099 tax form that companies also file with the government.

The practice is costing billions in lost tax revenue $467 million a year in North Carolina, according to McClatchy’s estimates, and $1.2 billion in Texas as federal and state governments fail to collect taxes from workers submerged in an underground economy.

For Lawson, the costs cut far deeper. The past decade brought years so lean he had to ask for help feeding his family. He’s missed bits of his three children’s lives as he disappears for weeks or months to work out of town. He worries he’s failed his wife, forcing her to be a single mother.

“All I wanted to do was take care of my kids,” Lawson said, looking at his daughters racing across the yard during a rare day off this summer. “I wanted to be there for my kids. Family is basically all I ever wanted.”

Slashing prices to compete

Lawson wasn’t naive. As a boy in rural Stokes County, north of Greensboro, he knew his life might be tougher than it was for his classmates who headed to college or the military.

Lawson had struggled in school with reading and got so frustrated that he dropped out before he could graduate. But he was strong – taller and bulkier than most of his classmates – and willing to work hard.

Lawson’s great-uncle built houses for a living. As a child, he remembers admiring the man’s fishing boat and fancy pickup. His uncle was able to build his own nice brick ranch house. Lawson wanted a life like that.

Amanda, gregarious and blond, and Joshua, boyish and tender, had been drawn to each other since middle school. They married in 2003, just after high school, after Lawson finally convinced her that he was the kind of guy she could lean on.

Lawson found work helping a neighbor build houses. They bid for jobs with a local contractor to do finishing work on apartments.

At first, it seemed like good money, but soon the contractor began quibbling over their bids. Lawson remembers his words: He could find immigrants to do the work more cheaply. Lawson and his neighbor slashed their prices to keep the jobs.

The numbers didn’t work. After expenses, Lawson barely had enough to cover his bills.

He and his wife were expecting their first child, and the pressure started to mount. He needed a steady, reliable income.

Lawson said he asked the contractor, Gene Pack of B&J Builders in Walkertown, to bring him on as an employee. The agreement was informal; the two never discussed what that meant. Pack agreed to pay him $10 an hour; Lawson was relieved at the thought of a regular check.

Pack said in an interview this summer that he had no employees and that when he won jobs, he then gave them to a Hispanic man to find workers and run crews. He said he couldn’t recall the man’s name and also had difficulty remembering who Lawson was.

A shock at tax time

Pack’s crews hustled, even as the recession loomed. They tackled vast apartment buildings, working seven days a week to finish as quickly as Pack had promised.

Lawson and the few American workers on Pack’s crew of about 30 kept to themselves.

New immigrants from Mexico, lured by work to North Carolina though the 1990s and 2000s, seemed to rotate through Pack’s crew each week. Some days, Lawson felt sorry for the immigrant workers, knowing the life they’d left in Mexico was far harder than any he’d known. Other days, he felt bitter.

Lawson said it wasn’t fair to bring in immigrants willing to work for less and “expect blue-collar guys like me to work (in the industry) and still provide for our families.”

Lawson almost always speaks softly, especially when he talks to his wife and children. But when he speaks of the construction industry, his voice hardens.

Pack cut Lawson a check each week, $10 for every hour he put in, with no taxes withheld. At first, Lawson didn’t understand the consequence of it, though he soon realized when he took his 1099 tax form to a preparer that spring.

He was told he needed to settle a year’s worth of taxes. And because he was self-employed in the eyes of the Internal Revenue Service by virtue of B&J Builders’ 1099, Lawson owed even more in payroll taxes than he would’ve had he been an employee. Luckily, the roughly $3,000 he owed in state and federal taxes was virtually offset by the child tax credits and deductions for dependents he could claim.

Still, Lawson felt he was short on money. After putting gas in his truck and buying his meals on the road, he said, he cleared little more than $200 a week.

He logged hours each day navigating the highways of North Carolina in his diesel truck to jobs on either side of the state. After Hurricane Katrina, Pack sent his crew to Louisiana to repair ruined apartment complexes. To save money, Lawson shared a motel room with three other men.

He tried not to dwell on the low pay. At the end of each week, he walked into their home, beat and defeated, and handed his check and a wad of restaurant and gas receipts to his wife. She would shake her head.

‘Somehow, I felt like it was my fault’

The Lawsons felt stuck. By 2007, their second daughter, Alexis, had arrived; the oldest, Angela, wasn’t yet in school. Amanda Lawson picked up side jobs when she could find child care, but she was limited by her husband using their only vehicle for work.

The bills piled up, and she found herself choosing between keeping the power on in their home or skimping on meals for the girls. She pawned their wedding bands, hoping that could buy them some time. They’re gone now.

Finally, the young couple realized they needed help. They visited the county social services office and applied for food stamps and Medicaid for the girls. Amanda Lawson said she’d never felt so ashamed.

At first, Joshua Lawson felt like a failure. Then he got angry.

“I worked my butt off at that company,” he said. “Somebody that works that hard shouldn’t have to ask for help.”

He vowed to find other work. He diligently searched the “Help Wanted” section of the newspaper, hoping to find something, anything. He couldn’t justify taking any time off to pound the pavement looking for jobs.

One day in 2009, he was forced to stop. He was standing on a ladder when he heard a commotion on the roof above him. A bundle of two-by-fours fell toward him, and by instinct, Lawson said, he reached up to grab the wood and shield the workers below. He injured his shoulder so badly he couldn’t lift his arm for weeks.

After the accident, Lawson said, he took the doctor’s bill to B&J Builders’ office and handed it to Pack’s daughter and manager. Lawson said she just shook her head and told him that he wasn’t an employee and the bill was his responsibility. Because he was being treated as a contractor, the company hadn’t purchased workers’ compensation coverage on him.

“After that, I realized I was being screwed over,” Lawson said.

Lawson didn’t think to complain to any officials. He doubted anyone would have cared about his predicament.

“Somehow, I felt like it was my fault for getting myself into this situation,” he said.

He applied for a few factory jobs; no one called. Lawson went back to work for B&J Builders.

‘No one cares about employees anymore’

By 2010, Pack’s company was hired to help build an apartment complex funded with federal tax credits in Concord, N.C. The federal government had awarded another $6 million in stimulus gap financing to help get the project moving after the recession stalled construction work.

Lawson and his fellow workers logged long days there, building balconies and doing interior finish work for 106 low-income apartment units in the suburbs outside Charlotte. Each week, Pack submitted payroll forms with the names of Lawson and nearly 30 others.

The forms show no taxes withheld on any of the workers, a violation of federal requirements for any worker who should be classified as an employee. The IRS and the Department of Labor dictate who can be an employee and who can be an independent contractor.

Lawson said he was told where to go each day, what time to arrive and how to tackle the task at hand. That sort of control and the lack of financial gain for him are factors the federal government uses to determine someone ought to be an employee, not an independent contractor.

Pack signed payroll forms each week listing the workers and certifying they were paid the wage federal regulators required. In an interview, Pack said he left it to a Hispanic labor broker to pay the workers.

“Once it left my hands, it was their problem,” he said.

Lawson didn’t know that Wexford Pointe, now called Brooke Pointe, received government financing, and, with it, federal scrutiny. Knowing that now affirms Lawson’s earlier suspicion.

“It’s all about what the companies can make, profit-wise,” he said. “No one cares about employees anymore.”

Dreaming of tomorrow

Lawson finally parted ways with Pack later in 2010. He took a job with HASCO, a Guilford County, N.C., company that paves and repairs airport runways.

Lawson is on HASCO’s payroll as an employee, and the money is steadier. He earns $17 an hour and has health insurance. But he travels far and constantly, sometimes for weeks or months at a time.

After a 12-hour day pouring steaming asphalt, he drags himself to the chain motel the company has booked for him and the other men on his crew. He takes a long shower, then hurriedly eats dinner alone. He tries to call his wife before the kids have gone to bed.

Lawson grills 11-year-old Angela about her schoolwork and reminds 8-year-old Alexis to listen to her mother. He tries to coax Landon, 5, to sit still long enough to tell him about his day.

The distance is killing Lawson, but he knows it’s better than what he had four years ago. The family weaned off food stamps in 2010 and takes care of the girls’ medical bills with his company’s health insurance.

Some weeks, his check has enough overtime pay that the Lawsons start daydreaming again: A brick house with a pool, replacing their worn double-wide trailer. Vacations at the beach with the kids. A nice ring for Amanda Lawson. A college savings plan for the kids, so they never feel stuck.

Locke reports for The News & Observer in Raleigh, N.C. We want to know your thoughts and experiences with misclassification. Share your feedback directly with the reporters: mlocke@newsobserver.com or 919-829-8927; or fordonez@mcclatchydc.com or 202-383-0010; or on Twitter @mandylockenews or @francoordonez.

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