Wage Enforcement Can Be a Revenue Raiser for Strapped State Budgets

Source: Progressive States Network, Stateside Dispatch, September 22, 2008

One reason for this trend towards wage enforcement is that state governments lose billions of dollars in revenue each year by failing to enforce state wage laws. Instead of spending state money on costly, wasteful local enforcement of immigration laws, stepped up enforcement of wage laws will more than pay for itself. For example, a February 2007 report by Cornell University researchers estimated that 704,000 of the seven million private-sector workers in New York state were misclassified as independent contractors, costing the state $175 million in unemployment insurance taxes each year and undermining those workers’ rights. Another study by New York’s Fiscal Policy Institute estimated that due to off-the-book wage payment violations, the state was losing $26 million in unpaid income taxes in the construction industry alone.
See also:
Cornell University Institute for Labor Relations, The Cost of Worker Misclassification in New York State
California, 2007 Fraud Deterrence and Detection Activities report
2006 Fraud Deterrence and Detection Activities report
National Employment Law Project, Combating Independent Contractor Misclassification in the States

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