Thread: MA: Legit businesses struggle to compete with under-the-tabl

Legit businesses struggle to compete with under-the-table outfits

By Dan McDonald
GateHouse News Service
Posted Oct 23, 2008 @ 02:26 PM

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FRAMINGHAM — Allen the licensed contractor briefly supplanted Joe the unlicensed plumber as the tradesman of the moment inside the Blumer Room Wednesday morning.

Framingham resident Allen Grome, who owns AG Reliable Remodeling, told state officials that he struggles to earn a living when others in his profession cut corners.

"It's difficult to compete when other people aren't following the rules," Grome told members of the state Task Force on the Underground Economy and Employee Misclassification.

Some of the information was not groundbreaking; companies that do not comply with regulations often offer lower prices than legitimate competitors who spend thousands of dollars on proper insurance and permitting and may only be skinning by on a 3 percent profit margin.

Off-the-books work also exploits workers, burdens the taxpayer, and offers consumers unregulated services - all topics touched upon by the task force.

The most recent statistics on the cost of the underground economy appear to come from a 2004 Harvard University and University of Massachusetts study. Those numbers show the state loses $154 million annually in income tax, $35 million in unemployment tax, and insurance companies losing $91 million in workers compensation premiums.

"It's important to note that these estimates are very conservative," said Framingham resident Stephen Joyce, director of government relations for the New England Carpenters Labor Management Program.

The federal figures are larger. As much as $324 billion is lost by the federal government, while 4,000 to 6,000 jobs had migrated into the underground economy, said Director of Labor George Noel.

One in seven workers in the construction industry may work off-the-books, said Noel.

Part of the blame should land on business owners, some of whom shirk liability through subcontractors and temp agencies, said Diego Low of the MetroWest Immigrant Worker Center.

"Established companies are insulating themselves from liability for failure to comply to labor laws by subcontracting out their entire labor force," said Low.

Whether a company has workers' compensation is public knowledge. What is not public is what percentage of employees are covered under that benefit. That information loophole needs to be closed, said Low.

The under-the-table problem could get worse.

"The economy is tanking and there's going to be more incentive to cheat," said Joyce.

That may also lead to an increasingly cash-strapped customer base to hire under-the-table contractors.

The divisive topic of immigration was delicately broached.

Linnea Walsh, spokeswoman for the Executive Office of Labor and Workforce Development, delineated between her office and the federal government on that issue.

"We're not interested in the status of undocumented workers," she said.

Rather her office is more interested in educating, enforcing existing tax laws and bringing employers into compliance with such regulations, she said.

State Rep. Pam Richardson, D-Framingham, recalled hearing the story of a Brazilian immigrant working in conditions tantamount to "a modern day slave."

A testimonial of a man named Anderson, whose last name was not divulged, was read aloud, recalling the months he worked after immigrating to MetroWest. For six months he toiled as a carpenter, receiving only a few weeks wages and was threatened with law enforcement if he complained.

Carly Burton, the acting deputy director for Massachusetts Immigrant & Refugee Advocacy Coalition, said there were inherent problems in federal bureaucracy for those seeking asylum in this country.

Many cannot get work authorization for months, said Burton. That drives them into the underground economy, where some take underpaid and unregulated jobs with no benefits.

"There's a lot of fear in many immigrant communities," she said. "There are concerns of detention and deportation."

When Jim Rizoli, who spearheads Concerned Citizens and Friends of Illegal Immigration Law Enforcement, rose to speak about illegal immigration, people called out "Racist!" before he was shouted down and the session adjourned.

Afterward, Rizoli said he found it ironic that he was not allowed to talk about illegal immigration at a forum about the underground economy.

"They missed the boat," he said.

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"There's a lot of fear in many immigrant communities," she said. "There are concerns of detention and deportation."

Welcome to America and be afraid that perhaps, one shining day, all of our laws will be enforced, and perhaps all companies in this country will get a touch of patriotism, rather than greed.

When Jim Rizoli, who spearheads Concerned Citizens and Friends of Illegal Immigration Law Enforcement, rose to speak about illegal immigration, people called out "Racist!" before he was shouted down and the session adjourned.




And this behavior was tolerated by the Task Force? A Task Force funded, I assume, by taxpayers in MA.....and yet this man, this taxpayer, was not permitted to speak and the Task Force members did nothing which would have allowed him to speak?

I guess the Task Force is just something else put in place to make it look like the state is doing something?