SAINT PAUL, Minn. – Today, North Star Policy Action released a report (“Subsidizing Abuse: How Public Financing Fuels Exploitation in Affordable Housing Construction”) highlighting widespread worker exploitation in affordable housing construction in Minnesota. Due to a lack of meaningful labor standards on projects funded by the Low-Income Housing Tax Credit (LIHTC) program and Tax Increment Financing (TIF), contractors with records or allegations of cheating workers are too often used. North Star Policy Action’s research documented the use of contractors tied to proven or alleged exploitation of workers on affordable housing projects receiving over $84 million in taxpayer subsidies since 2016.
Rep. Michael Howard (DFL – Richfield), chair of the House Housing Finance and Policy Committee, plans to introduce a bill to address the issue during the 2024 legislative session.
“This well-sourced report highlights an unacceptable trend where affordable housing is being built on the backs of workers who earn too little to even afford their own home. Wage theft is a crime and it has no place in housing development, especially when public dollars are used to finance construction,” Rep. Howard said. “The Minnesota Legislature must take heed of this report and take action. We will be working in partnership with workers to bring forward legislation to ensure greater transparency, standards, and accountability in the development process. When we build affordable homes, we must ensure we’re doing so with respect for the Minnesotans who are building them.”
Minnesota has a severe and growing housing crisis, with the supply of low-cost rental housing in Minnesota decreasing by a quarter over the last decade. To address this crisis, lawmakers delivered $1 billion worth of housing investments during the 2023 legislative session – the largest in state history. However, without stronger oversight over the use of LIHTC and TIF dollars, new housing projects are at risk of being built by vulnerable workers who earn too little to live in the homes they build.
Wage theft and exploitation remain persistent problems in the construction industry. The report noted workers were at potential risk of exploitation by problem contractors on 25 projects receiving $31 million in LIHTC funding since 2016 and 14 projects receiving approximately $53 million in TIF subsidies since 2018. Three of the largest for-profit recipients of LIHTC and TIF funding repeatedly used contractors that have records of labor law violations or face serious allegations of worker exploitation.
The report recommends increasing transparency, adopting responsible contractor standards, holding project owners accountable for abuses that occur on their watch, and investing in enforcement and worker education.