Sinking Underground: The Growing Informal Economy in California Construction

Economic Roundtable Research Report, 2014

50 Pages Posted: 2 May 2016

See all articles by Yvonne Yen Liu

Yvonne Yen Liu

Solidarity Research Center

Daniel Flaming

Economic Roundtable

Patrick Burns

Economic Roundtable

Date Written: September 1, 2014


An analysis of California's construction industry found that 143,900 construction workers were employed in the informal economy in 2011. This was comprised of 104,100 construction workers who were not reported by their employers and 39,800 who were misclassified as independent contractors.

Construction is a $152 billion industry in the California, employing 895,000 workers, of whom one out of six has sunk into the informal economy. A quarter of employees in the specialty trades (including drywall and flooring) were informal.

Informal employment in California construction has increased by 400 percent since 1972. The ranks of the informal have increased with each economic recession, but most recently a larger share of workers have stayed in the informal sector because formal sector jobs have not been recovered.

Keywords: Abuse, California, Carpenters, Construction, Decline, Economy, Enforcement, Geography, Immigrant, Impact, Income, Informal Economy, Jobs, Misclassification, Payroll, Skills, Stimulus, Tax Revenue, Under the Table Jobs, Underground Economy, Unfair Competition, Unpaid Taxes, Unreported, Wages, Work

JEL Classification: C81, D63, H11, H26, I31, J21, J23, J24, J38, J64, J68, L52, M55, O15

Suggested Citation

Liu, Yvonne Yen and Flaming, Daniel and Burns, Patrick, Sinking Underground: The Growing Informal Economy in California Construction (September 1, 2014). Economic Roundtable Research Report, 2014. Available at SSRN:

Yvonne Yen Liu

Solidarity Research Center ( email )

1920 Hillhurst Ave #V920
Los Angeles, CA 90027
United States
(323) 539-7654 (Phone)


Daniel Flaming (Contact Author)

Economic Roundtable ( email )

244 S. San Pedro St., Ste. 506
Los Angeles, CA 90012
United States
2138928104 (Phone)


Patrick Burns

Economic Roundtable ( email )

315 W. 9th Street, Suite 502
Los Angeles, CA 90015
United States

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