An Opportunity for Democrats: Promoting fair Treatment of Wisconsin’s Workers

Democrats Must Again Be the Party of American Workers 

The Democratic Party has lost its position as the party of American workers. The reasons for the loss are complex, but there is no doubt that a large part of the American working class now votes Republican. This is a tragedy for American workers because the Republican Party's claim to represent their interests is entirely fraudulent. The party represents the interests of rich people and big business just as it always has.

The workers' shift to the Republican Party is also a tragedy for the cause of social justice in our country. In a time of increasing inequality and increasing concentration of wealth, the party of the rich will never promote the cause of social justice. That party promotes only ever lower taxes and ever decreasing regulation of business. We can see an example of that attitude in Wisconsin's failure to protect workers from exploitation by the misclassification of workers as independent contractors rather than employees.

Misclassification is Illegal Exploitation of Workers and Taxpayers

Many employers in Wisconsin are inflating their profits and defrauding Wisconsin’s taxpayers by misclassifying their workers as independent contractors rather than as employees. This allows the employers to avoid paying their fair share of the cost of workers’ compensation and unemployment insurance, and Wisconsin’s workers and taxpayers suffer as a result. This situation presents Democrats with an opportunity to ally our party with the needs of Wisconsin’s workers. The widespread practice of misclassifying workers provides our party with an opportunity to work as allies in workers’ struggles for fair treatment.

Misclassification is a Serious Problem

Misclassification of workers as independent contractors is a serious problem in Wisconsin. According to Wisconsin’s Department of Workforce Development (DWD), workers who are misclassified as independent contractors instead of employees are denied benefits like workmen’s compensation and unemployment benefits. Misclassification also causes workers to lose wages and benefits. A worker classified as an independent contractor may be paid less than the minimum wage and will of course not be paid for overtime at overtime rates. The lower pay caused by misclassification undermines the whole economy by reducing workers’ purchasing power. 

In addition, contractors and other employers who misclassify workers avoid having to pay their share of the costs of programs like workers' compensation and social security and are therefore able to offer lower bids on contracts. They “out-compete” their competitors by breaking the law and exploiting their workers. Finally, the practice of misclassifying workers costs our state government millions of dollars in lost tax revenue because of underreporting of wages. That cost is passed on to all of Wisconsin’s taxpayers either in the form of higher taxes or in the form of lost services that cannot be provided because of lost revenues. In effect, contractors and other employers are increasing their profits by breaking the law, by exploiting their workers and by short-changing the majority of our state’s taxpayers. 

Contract workers are often paid in cash "under the table," and that allows some unscrupulous workers to cheat on their taxes and on their responsibilities to their children. A union official told me that when a contract worker at a large construction site in the Fox Cities was asked why he didn't work as an employee of the construction company, he answered, "Why should I work for the company? If I worked for the company, I would have to pay child support?" Thus, he gains a personal advantage by exploiting the taxpayers and the pain of other workers. 

How widespread is the problem of misclassification? A 2022 report by DWD’s Task Force on Payroll Fraud and Worker Misclassification, the Unemployment Insurance (UI) Division of DWD conducted 1,709 audits and identified 3,365 misclassified workers in 2021. Those findings generated $780,000 in UI taxes and interest. In addition, there is a cost to the Uninsured Employers Fund ((UEF). The fund pays worker's compensation benefits on claims filed by employees injured while working for illegally uninsured employers. Payments vary substantially from year to year depending on the severity of claims accepted. The annual average for the last 10 years is $2.5 million.

Support Our Workers' Fight Against Illegal Exploitation

These numbers show that there are many employers in Wisconsin who are willing to increase their profits by exploiting Wisconsin’s workers and defrauding our state’s taxpayers. We should not allow that. Our state should step up its enforcement efforts as Gov. Evers has recommended.

If we Democrats want to recapture our position as advocates for working Americans, we can begin here at home. We can take advantage of this opportunity to provide real support for working-class people of all races and genders. The difference between the real support that we offer and the fake support that Republicans offer will be obvious to everyone.

Let’s get to work! Contact your state legislators and tell them that you want to see our state increase the amount of money devoted to the proper enforcement of the laws against the illegal misclassification of workers.